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UK wine retailers warn public about ‘inevitable’ price hikes

04 October 2024 By Arabella Mileham

Wine retailers across the UK are warning consumers that they will be “powerless to protect” their customers from the inevitable price rises set to hit the industry in February when the new duty banding it due to roll out.

It comes as part of a new WSTA consumer campaign to put pressure on the government to make the current temporary easement permanent at the budget on 30 October.

The retailers which together have over 10,000 customers and multiple sites in the UK – want to raise awareness of the complications for business that the new wine duty banding will introduce and the implication this has for price increases.

It includes specialist retailer Majestic, Laithwaites, The Wine Society and leading independent Cambridge Wine Merchants, who have emailed their customers today (4 October) warning of the rises. They said the new banding will fail to create a duty system that would be simpler and fairer for wine businesses to administer, which was its intended purpose.

“As an industry, we firmly believe the system that is set to be introduced fails on both counts – it is more complex and will be much more costly,” it stated. “Businesses like ours will need to invest six-figure sums just to develop the systems required to handle the new approach, with ongoing administrative costs likely to run into similar sums on an annual basis.”

It said that the Treasury’s “insistence” in continuing to introduce the changes from 1 February 2025 (despite the change of government this summer) would threaten wine’s place as “the most popular alcoholic drink in the UK” while undermining the UK’s position as the second-biggest importer of wine in the world.

“There is a genuine risk that the producers of your favourite wine will stop shipping it to the UK entirely, due to the additional administrative burden that will be involved in exporting wine to Britain,” it said, pointing out that small, family-run vineyards were unlikely to change processes “that have been in place for generations just to suit the UK market”, when they could export wines to other markets without the additional administration or costs.

“With less than four months until this policy changes, we now feel obliged to tell you, our loyal customers, that these changes are coming. Whether your favourite wines increase in price, or disappear from shelves altogether next year, we, as an industry, will become powerless to protect you from that.”

It marks a step up in the warning from the industry, led by the Wine and Spirit Trade Association (WSTA) who have repeatedly called for the temporary easement to be made permanent.

They say this will avoid red tape costs and help businesses grow, while keeping prices down for consumers and ensuring stability in the Treasury income.

Currently, excise Duty is the same on all wines between 11.5% abv and 14.5% (£2.67) due to a temporary “easement” introduced by the Tory government last year to ease in the new duty system. This is due to be removed on 1 February, when the full duty banding will kick in, meaning that wines between 11.5 – 14.5% abv will be banded according to the strength of the alcohol, resulting in up to 30 different payable amounts.

WSTA chief executive Miles Beale said that this “bleak warning” could still be avoided if the new Government puts a stop to former Prime-Minister Rishi Sunak’s decision “to impose a huge bureaucratic burden on the UK’s wine industry” that would not benefit the public finances but would impose “damaging additional costs and red tape through maintaining the wine easement” .

“There is still time to help boost British businesses in a potential-packed sector by maintaining the wine easement and freezing alcohol duty. It won’t cost Government anything, but it will support British business by promoting conditions for growth and protect British consumers by keeping prices stable.”

The Wine Society CEO Steve Finlan added that if the new government was serious about listening to business then they should recognise that an entire industry was “united against the proposed new duty regime”.

“It should be simple to extend the current easement and then enter into meaningful dialogue to find a solution that works for government, for business and for consumers,” he said.

Majestic CEO John Colley called the previous government’s plan to create a simpler, fairer and less bureaucratic duty system a failure and going from one duty band to 30 different bands based on ABV would “be bad for consumers, retailers and hospitality operators”.

“Removing the wine easement will disproportionately hit small businesses – including the 900 independent wine merchants operating across the UK and the many importers dealing with the international wine trade. This will restrict growth and threaten peoples’ livelihoods at a time when we should be doing everything we can to support our high streets,” he said.

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