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Two percent cut in alcohol duty will support on-trade, WSTA claims

By Ben Winstanley , 11-Feb-2016
Last updated on 11-Feb-2016 at 11:21 GMT2016-02-11T11:21:55Z

WSTA Government alcohol duty cut to support pubs distillers vineyards

The Wine and Spirit Trade Association (WSTA) has called for the Government to back British distilleries and vineyards with a 2% alcohol duty cut in the March Budget, a move they claim will support the growing demand for wine and spirits in the on-trade.

WSTA chiefs have teamed up with industry leaders in English wine and British gin to raise awareness of the petition, which also seeks to rebuild confidence in the marketplace, encourage investment, create jobs and grow exports.

An additional £200m in revenue was brought into the Treasury from wine and spirits in the past nine months, with wine duties now on course to reach more than £4bn in one year for the first time and spirits expected to reach £3.1bn.

Chief executive of the WSTA, Miles Beale, said: "The wine and spirit industry has faced difficult trading conditions over the past few years, seeing sales and revenues decline, which has impacted on its ability to create jobs and to invest.

"A report commissioned by the WSTA and the British Institute of Innkeeping (BII) also revealed that 2.6m people are employed in hospitality making it the UK's fourth largest employer.

"We have seen a change in the nature of demand with the new openings of pubs, bars and restaurants showing sales of wine and spirits are as high as 51% compared to 37% in the venues closing down.

"Wine and spirits play an increasingly important part in the success of the pubs, bars and restaurant trade.

"Our ask for the Chancellor in the 2016 Budget is therefore very simple. To build on his admirable decisions at the last two March budgets, and to move away from some of the highest excise duty rates in the EU, we are calling on the Government to cut excise duty on wine and spirit by a modest 2%.

"Evidence now clearly shows that these cuts are not only popular, but have led to greater revenue for the Exchequer, more jobs, greater investment by the industry and a better deal for consumers."

Denis O'Flynn, chairman of the WSTA and MD of Pernod Ricard, said: "The UK's wine and spirit industry as a whole supports almost 600,000 jobs in the UK and contributes £45bn in economic activity.

"Further support for wine and spirits will bring more jobs, grow exports and allow our great British products to compete in the fiercely competitive global marketplace."

Current duty on a bottle of wine is £2.05, meaning that 55% of the average priced bottle goes on duty and VAT.

Sparkling wine, which makes up two thirds of all English wine production, takes an even bigger hit with duty 28% higher than still wine, adding up £2.63 per bottle.

The UK has the second highest wine duty in the EU and fourth highest spirits duty – an average 70cl bottle of spirit with 74% or £7.26 of customers' money going towards duty and VAT.

Industry leaders

Beale and O'Flynn, joined by English vineyard owner Mark Driver and gin distiller Helen Chesshire to meet Treasury Exchequer Secretary Damian Hinds MP on 3 February.

Helen Chesshire, who set up Brighton Gin, in 2014, said: "British gin is going down a storm across the world but for small businesses like ours excess duty rates are a drag on growth.

"They affect our cashflow, tie up working capital and stop us recruiting and expanding our business. What I really want is more employees, bigger premises, to crack a couple of export markets - and a forklift truck!"

Mark Driver, owner of the UK's largest single site vineyard, Rathfinny Estate in Sussex, is on target to produce one million bottles of English sparkling wine by 2020.

Driver said: "English wine is no longer seen as artisanal product and is competing with the best in the world. A 2% cut - or dropping duty on sparkling wine to the level of still wine - would lead to a fairer playing field and incentivise investment in modern, high-value agriculture. This would allow us to compete globally - and that's what English wine really needs to encourage a golden future."

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