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The UK Government ‘chose not to listen’ to WSTA on duty hikes

From 1 February, wine businesses and consumers across the UK will be grappling with a tax hike exceeding £175 million as new excise duty rates kick in, coinciding with the end of the wine easement.

Compounding the burden, businesses will face increased administrative costs under the revamped duty system, inevitably driving prices higher.

“Make no mistake: this is both a tax hike for consumers and a new burden on businesses,” Miles Beale, chief executive of the Wine and Spirits Trade Association (WSTA) tells db.

The Treasury’s overhaul of wine taxation takes aim at bottles between 11.5% and 14.5% alcohol, a category that accounts for 85% of all UK wine sales. This shift introduces a labyrinthine structure of 30 duty charges within this range.

For the UK’s 33 million wine consumers, the impact is clear: higher prices. A 14.5% red, for instance, will see duty rise from £2.67 to £3.21 per bottle—a hefty 20% jump. Factoring in the increases from August 2023, duty on the same bottle will have soared by 44%, or 98p, in just 18 months.

Financial impact

“History shows that consumers are price sensitive so in the long term, this will stifle demand and reduce choice,” Beale says. “The financial impact will be different for every business, but it is estimated that some of the major retailers will be facing millions of pounds in losses.”

This is true of the world’s oldest wine club, The Wine Society, which revealed the cost of duty on its business exclusively to db in December 2024.

“Duty as a whole will cost us in the region of £3 to £3.5 million [in 2025],” said CEO Steve Finlan. 

The cost of duty

For The Wine Society, the further duty hike is part of a broader financial squeeze. Costs are climbing: £1.3 million from the Government’s Extended Producer Responsibility scheme, £400,000 from rising National Insurance contributions and another £400,000 from rate increases as taper relief fades.

Adding to this, a staff pay review will cost £400,000. Together, these pressures pile on approximately £5.5 million in added costs for a business which was forecasted to earn £2 million in profit last year.

“If we just do nothing, we’re going to have a £3.5 million hole,” Finlan said of the challenge ahead. He was frank about the wider implications for the industry, particularly for smaller businesses. “We’ll manage it because we’re big enough and we’re a mutual, as I say, so we can make choices that are easier. But when you get down to… I don’t know how on earth [small independents] are going to see their way through.” 

Price increases

Retailers, striving to shield customers from these hikes, may pivot towards lower-alcohol wines. While this mitigates costs, it risks narrowing the range of higher-abv wines, potentially leaving consumers without some of their favourites.

“For smaller independent retailers the administrative burden of calculating the new duty system will hit hard and if they want to maintain consumer choice, they will have no option but to charge their customers more,” Beale says.

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When consulted on the alcohol duty review, the WSTA advocated for a simpler solution: two tax bands pegged to a midpoint, benefitting the Treasury, businesses and consumers alike.

“The WSTA has had intensive engagement with the numerous Governments who have been running the show since Rishi Sunak, as Chancellor, first announced a consultation into the way alcohol was taxed,” Beale says.

Government refused to listen

The introduction of the now-ending easement was arguably a tacit admission from the Government that the scheme was fundamentally flawed.

“The WSTA took every opportunity with MPs, officials ministers and the media to call for the easement to be made permanent ensuring the Government were made fully aware of the financial implications. They chose not to listen and refused to consider any change to the original Sunak plan,” Beale says.

The duty battle has run alongside a particularly tumultuous time in politics, with a series of rapidly changing Governments and with that policymakers.

It’s clear that this Government is reluctant to do too much on inherited policies that were embedded and ready to go, but the WSTA may have more scope to influence the agenda for new policies coming down the line.

While reluctant to untangle legacy policies already in motion, this Government may yet offer the WSTA an opening to influence fresh policy discussions on the horizon.

“We will be focusing on working with ministers and officials to help mould a trade strategy that will boost British business and we hope that they will recognise, and take more seriously, a trade that contributed over £76 billion in economic activity in 2022, generated over £22 billion Gross Value Added (GVA) to the UK economy and supports 413,000 jobs,” Beale concludes.

New rates (from 01/02/2025)

Wine % ABV Duty per bottle now £ Duty per bottle from 01/02/25 Difference £ Difference %
11.0 £2.35 £2.43 £0.08 3.3
11.5 £2.67 £2.54 -£0.13 -4.9 
12.0 £2.67 £2.65 -£0.02 -0.8 
12.5 £2.67 £2.76 £0.09 3.4 
13.0 £2.67 £2.88 £0.21 7.9 
13.5 £2.67 £2.99 £0.32 12 
14.0 £2.67 £3.10 £0.43 16.2 
14.5 £2.67 £3.21 £0.54 20.3 
15.0 £3.21 £3.32 £0.11 3.5 

750ml

Products comparison

Product type Current Duty  Duty per bottle from 01/02/2025 Difference  % Change
Vodka 37.5% abv 70cl £8.30 £8.60 £0.30 3.6
Gin at 40% 70cl £8.85 £9.18 £0.32 3.6
Sparkling Wine 12% abv 75cl £2.67 £2.65 -£0.01 -0.5 
Still Wine 14.5% abv 75cl  £2.67 £3.21 £0.54 20.2 
Sherry 15% abv 75cl £3.20 £3.32 £0.12 3.6 
Port 20% abv 75 cl £4.27 £4.43 £0.16 3.6 
spirit-based Cream Liqueur 17% abv 70cl £3.39 £3.51 £0.12 3.6
Pre-Mixed G&T 5% abv 250 ml  £0.31 £0.32 £0.01 3.6 
440 ml can cider 4.5% off trade  £0.19 £0.19 £0.01 3.6 
Pint cider 4.5% on-trade (draught) £0.22 £0.22 -£0.00 -1.7
440ml can beer 4.5% off trade £0.41 £0.43 £0.02 3.6 
Pint beer 4.4% on trade (draught) £0.47 £0.46 -£0.01 -1.7 

Alcohol Duty uprating – GOV.UK (Uprated by 3.65% – forecast RPI rate for Q2 2025)

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