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‘Misery’ Budget for drinks industry

‘More misery’ was predicted for the UK drinks industry after an extra 10p was put on a bottle of wine in the last Budget before the General Election.

Chancellor Alistair Darling’s 5.1% increase in alcohol duty from midnight on Sunday had been widely predicted.

But all the same it was greeted with universal dismay by a drinks industry already severely affected by the economic downturn.

The latest duty rise means that the tax on wine has risen by more than 25% in the last two years, with more to come: the Chancellor promised to increase taxes by 2% above inflation every year for at least the next four years.

‘Successive punitive tax rises on alcohol are taking their toll on household budgets and mean further job losses in the drinks industry are on the cards this year,’ said Jeremy Beadles, chief executive of the Wine and Spirit Trade Association (WSTA).

‘The last year alone has seen business closures and 30,000 job losses, and today’s Budget means higher prices for consumers and more misery in a sector that ought to be part of Britain’s economic recovery.’

The Chancellor also announced a 13% increase in cider duty to address what he called a ‘long-standing anomaly’ in duty levels, and said he would ensure that strong cider was taxed ‘more appropriately’ in future.

The British Beer & Pub Association (BBPA) said the tax hikes would ‘pile on the misery’ for the country’s beleaguered pub sector, which had seen 4,000 closures and more than 40,000 job losses in the last two years.

And both the Scotch Whisky Association (SWA) and Gin & Vodka Association (GVA) pointed out that tax revenues earned from spirits had fallen by £49m in 2009.

‘The Chancellor’s duty escalator policy is totally misguided,’ said SWA chief executive Gavin Hewitt. ‘After the election, the new Government needs to take a long, hard look at the excise duty regime.’

The duty rises will add an extra 38p to the price of a bottle of Scotch whisky, including the impact of VAT.

Decanter editor Guy Woodward said, ‘The government keeps upping duty on wine in a bid to mollify the anti-alcohol brigade, but it’s not tackling the root cause of the problem, which is the bullying approach of some supermarkets.

‘These latest rises – 10p on a bottle of wine – are unlikely to be actually passed on directly to the consumer, who will instead be punished by retailers forcing suppliers to cut costs, meaning lower quality in the bottle.

‘Until the government puts an end of loss-leading wine sales, as they have in France, responsible drinkers will lose out while binge drinkers will continue to be catered for.’

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Written by Richard Woodard

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