Retailers are usually quick to announce price reductions and quiet about price increases, but some wine retailers have broken ranks to alert customers to the looming increase due to changes in taxation.
The campaign is being led by Majestic Wine as well as Laithwaites Cambridge Wine Merchants, and the Wine Society. They are all trying to stop a new system of alcohol duties “before it’s late”. The wine industry had previously predicted that the new rules would lead to a price increase of 75% for red wines.
The new system, which will come into effect on the 1st of February, will increase the number tax bands for wines from one to thirty. Posters for the campaign claim that it will increase complexity and costs for wine retailers, and “could lead to your favourite wine being increased in price or removed entirely from our ranges”.
Majestic Wine merchants also sent emails to their customers asking for their help in overturning the policy. They urged them to bring the issue up with their MP.
The email stated that “most concerningly for you as discerning wine lovers, the quality and selection of wine you can purchase will likely be negatively affected.” There is a real risk that producers of your favorite wine will cease shipping it to the UK due to the administrative burden.
The plan will tax alcohol by volume (ABV), not by type. Duty increases by 2p per 0.1% increase in strength. The Treasury proposed it last summer, when Rishi Sunak served as chancellor.
The government recognized the administrative burden, and set up a “easement” of 18 months. During this time, all wines with an ABV between 11.5% to 14.5% pay a tax of £2.67 (the 12.5% ABV duty).
The Wine and Spirits Trade Association found that prices for about 43% will rise when the tax ends at the end of January. Tax on a wine bottle with an ABV above 14.5% will rise by maximum 42p, to £3.09.
The price of red wines, which have a higher alcohol content than whites, is expected to increase by 75%.
Wine sellers and the WSTA are calling for the easement in the 30th October budget to be permanent. They argue that it will “help grow businesses, keep prices low for consumers, and stabilize Treasury income”.
John Colley, the chief executive of Majestic, said that this was not about Majestic. The removal of the wine easement would disproportionately affect small businesses, including the independent wine merchants and importers operating in the UK. This will limit growth and threaten the livelihoods of people at a time we should do everything to support our high street.”
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