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By Brad Young, live reporter
Enjoying a drink in the summer sun may soon become more costly, as brewers and winemakers warn changes to alcohol taxation will increase the price of bottled beers, spirits and wines.
Some brewers are reportedly considering reducing the strength of beer to sidestep costs, while there are fears some wines may disappear from the shelves altogether.
Alcohol duty will be unfrozen on 1 August for the first time since the beginning of the pandemic and Chancellor Jeremy Hunt confirmed in March that it will increase in line with inflation.
Taxation on bottled beers and spirits is set to increase by 10%, costing the industry £225m, trade associations have said.
“With business costs set to soar, it’s impossible to see how brewers can carry on exactly as they are whilst still avoiding customers paying over the odds for their beer,” said Emma McClarkin, chief executive of the British Beer and Pub Association.
Ending the duty freeze will cost the industry £225m “at an already challenging time”, with brewers facing “mounting price increases across supply chains” in the last two years, she said.
The challenge for wine producers may be even greater, given the introduction of a new system of calculating alcohol duties on the same day.
Wines will be taxed more the stronger they get, rather than by the volume of liquid as they are under the current system.
This equates to another 10% rise in costs, so when the end of the duty freeze is accounted for too, taxation on the average 75cl bottle of 12.5 abv wine will be 20% higher, according to Simon Stannard, director of policy at the Wine and Spirit Trade Association.
“Alcohol tax rises will only further fuel inflation. It will heap more misery on consumers. And it will damage British business, especially those in the hospitality supply chain, who are still trying to recover from the pandemic,” he said.
Alcohol levels in wine cannot be reduced in the same way as beer, he said, because it changes the product.
Wine from hotter countries, which naturally produce stronger wines, will be “penalised most of all”, he said.
Draught products in pubs will not suffer the same fate due to a government scheme that promises their duties will be up to 11p cheaper than for bottled or canned products.
The treasury has been contacted for comment.
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