UK budget: Wine loses out as chancellor favours beer and spirits

UK chancellor George Osborne has offered some respite to drinkers by announcing he will scrap automatic, above-inflation duty tax rises on alcohol, but wine still fared worse than beer and spirits.

Osborne told Parliament in his Budget Speech today (19 March) he is ‘scrapping the escalator for all alcohol duties’.

The policy, introduced by the previous government under the auspices of encouraging responsible drinking, has provided for annual 2% above inflation duty rises on beer, wine and spirits since 2008.

‘This is fantastic news,’ said Miles Beale, chief executive of the Wine & Spirit Trade Association (WSTA), reacting to the chancellor’s announcement. ‘It is great news that our Call Time on Duty campaign has been successful.’

However, the 2014 Budget was bittersweet for wine drinkers. Wine duty will still rise in-line with inflation, which was running at around 2% at the latest count, while there will be a one pence per pint duty cut for beer and a total freeze on spirits duty.

Prior to today’s Budget, UK wine duty alone had risen by 50% including inflation since 2008, according to WSTA figures. That means more than half the cost of a £5 bottle of wine goes to the Exchequer.

Several observers still broadly welcomed the government’s move, despite another rise in wine duty. ‘Very happy to see UK wine duty escalator scrapped,’ tweeted Jancis Robinson MW.

‘No end to duty increase on wine but getting rid of the duty escalator is a start,’ tweeted Gavin Quinney of Chateau Bauduc in Bordeaux. He added that freezing spirits duty and not wine ‘sends out the wrong message’.

Michael Saunders, managing director of the Bibendum wine merchant, said the decision to continue increasing wine duty represents a ‘missed opportunity’ to support the trade.

While the beer duty cut was positioned to support community pubs, Saunders said, ‘nearly a fifth of all drinks sales in pubs are wine and this new increased duty rate will have a real impact on business’.

The WSTA’s Beale said, ‘While we would have liked to have seen a complete freeze on wine duty, the WSTA and our Call Time on Duty campaign partners applauds the Chancellor’s decision to scrap the escalator and will be raising a toast to George Osborne,’

Written by Chris Mercer