High alcohol tax blamed for continual drop in UK wine and spirit sales

23-Jun-2013 - Last updated on 26-Apr-2021 at 19:25 GMT

Tax now accounts for 57 per cent of the cost of a bottle of wine, which the WSTA says is driving down its sales.

The Government’s alcohol duty escalator is being blamed for a continual drop in sales of wine and spirits in the UK’s restaurants, pubs and hotels as research shows that British drinkers now pay 43 per cent more for alcohol than their European counterparts.

Figures published by Eurostat and the ONS show that drinkers in the UK now pay more for their alcohol than those in other EU countries, except Sweden, Finland and Ireland, due to the duty escalator for alcohol introduced in 2008.

Miles Beale, chief executive of the Wine & Spirit Association (WSTA), said the 50 per cent increase in duty on wine and 44 per cent on spirits was putting the sector ‘under significant pressure’ and was the main reason that volume sales of alcohol in the on trade had dropped 3 per cent in the last year.

He said: “The Government has been putting increasing pressure on consumers with continuous tax rises on wine and spirits for the past five years. Tax now accounts for 57 per cent of the cost of a bottle of wine and 79 per cent of a bottle of vodka.

“These figures show that British consumers are being squeezed much more than our European counterparts. At a time when cost of living increases are hitting families hard the Government needs to urgently reconsider its unpopular wine and spirits duty escalator.”

Volumes

The new figures are revealed less than a week after the release of the WSTA's latest Market Report. The quarterly report found that while volume sales of Champagne, sparkling wine and spirits had risen by 9, 7 and 2 per cent respectively, volume sales of wine, beer, cider and RTDs had all fallen.

Prices across all categories had risen over the last three months, however, but this was due to duty, the report said.

“While there are a small number of categories in the wine and spirit sector with modest volume growth, the overwhelming picture is one of decreased sales and increased duty rates, with consumers inevitably having to foot the bill," said Beale.

“Since the introduction of the alcohol duty escalator in 2008, duty on wine has increased by 50 per cent and spirits by 44 per cent, putting the sector under significant pressure.”

The report, created in conjunction with CGA Strategy and Wilson Drinks Report, also found that the average monthly spend on going had remained unchanged at £41 per person since February and was down since November 2012.

Best-selling wines over the last year were found to come from Argentina (up 12 per cent), France (up 6 per cent) and Italy (up 1 per cent).