The price of a bottle of fizz could rise by 9p

08-Oct-2018 - Last updated on 08-Oct-2018 at 08:40 GMT

Make wine while the sun shines: the high temperatures of 2018 created almost perfect grape growing conditions

If plans to increase wine duty in line with inflation (by 3.4%) go ahead in November’s Budget, prices of sparkling could soar by 9p and still variants by 7p, according to a leading industry body.

Winemakers alongside the Wine & Spirits Trade Association (WSTA) are calling on the Government to not introduce planned tax rises in order to support the English and Welsh wine sector.

A letter signed by 14 of the WSTA’s English wine members has been sent to Chancellor of the Exchequer Philip Hammond and Environment Secretary Michael Gove calling for a freeze on wine duty.

The letter states that the significant tax burden is restricting growth and damaging to rural communities.

The wine industry in England and Wales is currently reaping the rewards of the record heatwave this summer, which has produced near perfect grape growing conditions, according to the WSTA.

In the past decade, the area of planted vines has more than doubled with a record-breaking 1m vines planted in each of the past two years and even more due.

However, the celebrations surrounding a bumper harvest are set to be overshadowed by bad news from the Chancellor next month (November), if he goes ahead with a planned 3.4% duty rise in line with inflation.

Thanks to this year’s plentiful harvest, the Chancellor is set to receive an extra boost to Treasury coffers when the 2018 vintage goes on sale.

Additional windfall

The WSTA said in November 2017, the Chancellor delivered a welcome freeze to alcohol duty, leading to an additional £380m windfall from booze tax, between February and July – a rise of 6% on the same period the previous year.

Duty is currently so high that more than half (55%) of an average-priced bottle of wine sold in shops and supermarkets is now taken by the Treasury in tax and VAT.

According to the trade body, the UK alcohol industry is one of the most heavily taxed in Europe and the current Chancellor’s duty policy is a stark contrast to how other countries treat their vineyards and winemakers.

About two thirds of the wine made in England and Wales is sparkling, which attracts the most duty at £2.77 a bottle. Consumers pay £2.16 in tax on a bottle of still wine. In France, consumers pay the equivalent of just 7p a bottle on duty for sparkling and 3p for still.

Latest data from the WSTA showed that last year, consumers drank 35% more English sparkling wine than they did in 2013.

WSTA chief executive Miles Beale said: “English wine is a great British success story and we are now proudly producing top-quality wines that are rivalling the best fizz from around the world.

“This year has so far been a vintage year for English vineyards, which are reaping the benefits of the record heatwave.

“The knock-on effect of near-perfect growing conditions in the UK has led to high-quality grape bunches and many vineyards have experience their earliest harvests ever.

“With the good weather continuing into October, our English winemakers are reporting a bumper harvest.

“But the Chancellor is planning to take the fizz out of English winemakers’ success by adding to its already high tax bill this year, hampering the industry’s ability to grow, invest, export and create.”

Further export opportunity

Scrapping the plans to increase duty in line with inflation would increase the chance for export, according to Chris White CEO of Denbies Wine Estate in Surrey.

“This action is necessary in order to support the current demand for English wine and the growth of the industry,” he said.

“A duty freeze would also stimulate further opportunity for export. We would like to see the Government adopt a model employed in all other EU countries where the lower duty rate has helped support the growth of their wine industry.”

The freeze would also help the UK economy, alongside employment and tourism, Hampshire’s Hattingley Valley chairman Simon Robinson said.

He added: “The English and Welsh wine industry is a bright spot of the UK economy that is set to flourish so long as the Government provides a stable and supportive environment.

“Growth in the industry will provide significant rural employment and development as well as significantly underpinning developments in tourism.

“Increasing duty on our products is now helpful, especially when one considers the additional revenue, which will accrue to Government from increased employment in the industry.”