As a rule, retailers tend to trumpet price cuts and keep quiet about increases but wine sellers are breaking ranks to warn customers of looming rises due to a shake-up of the way wine is taxed.
The big names behind the campaign include Majestic Wine, Laithwaites, Cambridge Wine Merchants and the Wine Society, who are trying to head off a new alcohol duty system “before it’s too late”. The industry has previously said the price of 75% of red wines would increase on the back of the new rules.
The new regime, which comes into effect on 1 February, increases the number of tax bands for wine from one to 30. The campaign’s posters say it will increase costs and complexity for wine retailers and “could result in your favourite wine having to rise in price or potentially being removed from our ranges entirely”.
Majestic and Cambridge Wine Merchants have also emailed their customers to ask for help to overturn the policy, urging them to raise the issue with their MP.
“Most concerningly for you, as discerning wine drinkers, the quality and choice of wine available for you to purchase is likely to be negatively impacted,” the email said. “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.”
Under the plan, drinks will be taxed on alcohol by volume (ABV) rather than the type. The amount of duty paid rises by 2p for every 0.1% increase in strength. It took effect officially last summer after being put forward by the Treasury when Rishi Sunak was chancellor.
Nevertheless, the government acknowledged the new administrative burden and put an 18-month “easement” period in place. During this period all wines between 11.5% and 14.5% ABV pay £2.67 in tax, which is the 12.5% ABV duty rate.
Analysis by the Wine and Spirits Trade Association (WSTA) found that when this finishes at the end January the prices on about 43% of wines will increase. The tax on a bottle of wine with an ABV of 14.5%, the highest percentage to come under the rules, will increase by the maximum 42p to £3.09.
Red wines will be most affected given their higher alcohol content, with prices on 75% expected to go up.
Wine sellers, along with the WSTA, are campaigning for the easement to be made permanent in the budget on 30 October, arguing it would “help businesses grow, keep prices down for consumers and stabilise Treasury income”.
“This is not just about Majestic,” said John Colley, its chief executive. “Removing the wine easement will disproportionately hit small businesses – including the 900 independent wine merchants operating across the UK and the many importers. This will restrict growth and threaten peoples’ livelihoods at a time when we should be doing everything we can to support our high streets.”
