The drinks industry is warning it will “have no choice but to increase prices” as a new rise in alcohol duty rise takes effect.
Chancellor Rachel Reeves confirmed in November’s autumn budget that alcohol duty would rise in line with Retail Prices Index (RPI) inflation.
As a result this tax charged on alcoholic drinks will increase by 3.66% from Sunday, and athough it’s manufacturers who pay, industry chiefs warn there may be a “trickle down” effect to shoppers.
Official data shows the changes will see the duty on a typical bottle of gin, with 37.5% alcohol by volume (ABV), increase by 38p to £8.98, after VAT.
A bottle of Scotch whisky at 40% ABV will see its duty increase by 39p to £9.51. Meanwhile, a bottle of 14.5% red wine will see its duty increase by 14p.
The Wine and Spirit Trade Association (WSTA) said taxes on red wine at that strength had gone up £1.10 a bottle since the current alcohol duty regime was introduced in August 2023.
For beer, a spokesperson for the British Beer and Pub Association said the cost of a pint at the pub could rise by 2p, with brewers facing a £130m increase in costs industry-wide.
The UK Spirits Alliance, which represents hundreds of distillers across the UK, has written to the chancellor urging her to end “spirits discrimination” and adopt a long-term approach to duties.
How much tax is paid on a drink can vary according to its alcoholic strength, with beer below 3.5% ABV carrying significantly lower duties.
Some beer brands, such as Foster’s, have therefore reduced their strength to 3.4% in a bid to reduce their duty costs.
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Nonetheless, the duty on beer will increase on drinks sold in both pubs and supermarkets, with pubs impacted for the first time since 2017.
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British Beer and Pub Association Chief executive Emma McClarkin said: “These changes unfortunately increase the likelihood of further price rises, which no brewer or publican would want to inflict on their customers.
“For brewers, who already pay some of the highest rates of beer duty in Europe, this increase will add further strain to their already razor-thin profit margins and risk one of the UK’s world-renowned industries producing the greatest beers in the world.”
Miles Beale, chief executive of the WSTA, said: “For the nation’s wine and spirit sector the complexities of price changes, especially for wine which is now taxed by strength, mean more red tape headaches ahead.
“Add to this all the other costs – including national insurance contributions, business rates, and waste packaging taxes – and businesses have no choice but to increase prices in order to keep afloat, which unfortunately means consumers are going to take the hit once again.”
A Treasury spokesman said: “Alcohol duty plays an important role in ensuring public finances remain fair and strong and funds the public services people rely on every day.”
