Budget disappointment for wine and spirits

While the beer industry celebrated the scrapping of the beer duty escalator and a cut in duty, those in the wine, spirits and cider industries were left disappointed by George Osborne’s Budget.

The duty escalator is still in place on wine, spirits and cider, which means these drinks will see duty increase at above the rate of inflation, despite the chancellor cutting beer duty in Wednesday’s Budget.

In a statement Diageo said: “This move is disappointing. Cutting duty on beer while increasing it on spirits punishes the UK spirits industry for its success in this harsh economic climate. Scotch is the UK’s biggest food and drink export. This move risks that success.”

The Wine and Spirit Trade Association’s chief executive Miles Beale said: “This is bad news for the UK wine and spirits sector, with year on year duty increases hitting consumers and businesses hard. It makes little sense to single out beer, particularly as there is a legal precedent to suggest government is unable to do so.

“If this was designed as a measure to support pubs it seems misplaced: over 41% of drinks sold in pubs are wine and spirits, contributing £9.4bn per year. The chancellor’s decision ignores the growing value of the English wine industry and the UK spirits industry, which accounts for 18% of all jobs in the EU spirits industry.”

And while the Association of Convenience Stores chief executive, James Lowman “welcomed the decision to freeze beer duty”, he added: “The Budget does not include any radical changes that will transform confidence amongst everyday entrepreneurs, like local shop owners.

“The Chancellor has failed to act on business rates and missed an opportunity to undertake the radical reform needed to encourage investment in high streets up and down the country.”

Paul Bartlett, chair of the National Association of Cider Makers, was also disappointed to see beer singled out for a duty cut. He said: “We welcome the news that the Chancellor believes the duty escalator is flawed, but we are disappointed he has decided to remove it just for beer.

“We look forward to having the opportunity to discuss with government the removal of the duty escalator for all alcohol, including cider.

“Cider makers will recognise the benefit for a hard-pressed pub industry from this move. As vibrant pubs have a drinks offer much broader than just beer, the abolition of the escalator for all alcohol would have gone further.”

Ayo Akintola, MD of Oddbins, was damning in his opinion of the Budget, saying that the cut in beer duty “Smacked of a publicity stunt”.

He added: We had hoped that the Chancellor would have been bold enough to address the crippling matter of business rates, changes to which would have led to improvements of trade on the high street. But bold isn’t a word we would use to describe the Chancellor or this Budget.

“The scrapping of the beer duty escalator will ensure that Budget 2013 is not labelled an omnishambles like 2012’s. However, George Osborne’s claim that he wants to avoid punishing responsible drinkers seems hollow when he allowed a large increase in duty on wine.

“We are not statisticians, but we don’t think that a high proportion of “binge drinkers” are drinking wine. In fact a tweet posted moments after the announcement saying “Awesome!! Gonna save myself 10p on beer Saturday night #budget2013”, suggested that not all beer drinkers are as responsible as George made out.”