The wine trade has one last chance next month to avoid the “complete madness” of duty reforms, the Wine & Spirit Trade Association has warned.
Director Miles Beale believes that, if the new system goes ahead as planned in February 2025, it’s highly unlikely to be reversed even if a Labour government wins power in the forthcoming general election.
At present, all wines between 11.5% and 14.5% abv are taxed as if they were 12.5% – a temporary arrangement known as the wine easement. But next year, the new system will tax all wines according to their exact alcoholic strength, adding costs and bureaucracy for wine importers and retailers.
“We think this budget on March 6 is the last chance to keep hold of the wine easement,” Beale says.
“The new system is all about taxing according to strength. And bluntly, I don’t think the government understands the impact it will have for wine.”
He adds: “Eighty per cent of wines on the UK market are between 11.5% and 14.5% abv. That’s our estimate.
“Defra have made some changes that mean you can label to one decimal point [of alcohol]. So that now means that wines could be at one of 105 different rates or payment points.”
“Our argument is they should keep the easement,” Beale says. “That is not going to reduce the amount of revenue to the exchequer, so there’s no bad news for public funds.
“It will be a hell of a lot better for businesses, particularly small ones. The smaller the business, the more the red tape, effort and cost ramps up. We know independent merchants have, on average, a hell of a lot more SKUs and lines than the supermarkets. So it’s complete madness, if you’re trying to support small businesses.”
He adds: “It’s much better for consumers as well. So to us, it’s a bit of a no-brainer, but the government really don’t understand it.
“For a bottle of gin or beer, you control the abv. With wine, from vintage to vintage, there could be quite a large variation in the strength, even if it’s made in exactly the same way by exactly the same person with grapes from exactly the same vineyard. Government really doesn’t get that and certainly the new duty system doesn’t account for it. So it is a much bigger additional burden for those involved.”
The WSTA is urging all independent merchants to write to their MPs to make them aware of how badly the duty reforms will affect their businesses.
“That’s the only way to get this campaign off the ground – we need a minimum amount of noise to allow us as the trade body to put the squeeze on the government to make this change,” says Beale.
“And if they don’t do it at this budget, I don’t think there’s much chance of them doing it before the easement ends on February 1 next year, because I don’t think they’ll do it in the autumn. And if there’s a new government, the response will be ‘it’s not our fault, it was the last lot’.”
The WSTA has produced a draft letter setting out the arguments it believes merchants should be making and is encouraging retailers to add extra detail of their own.
“We’re saying it’s now or never: if you’ve never written to your MP before, you really have to do it now,” says Beale.
“We think there are almost two independent merchants per constituency out there. So every MP should be getting a couple of letters from independent merchants, and that will make a massive difference to this campaign.”
