Britons are being alerted to expect higher prices for their preferred alcoholic beverages starting today due to a new tax increase coming into effect, coinciding with the conclusion of Dry January.
Alcohol duty has been raised by 3.66%, in accordance with RPI inflation. This adjustment translates to an additional 11p on a bottle of Prosecco with 11% alcohol by volume (ABV), 14p on a bottle of red wine with 14.5% ABV, and 38p on a bottle of gin with 37.5% ABV, as reported by the Wine and Spirit Trade Association (WSTA).
The decision to implement the uprating was confirmed in the previous year during the Autumn Budget. Leaders in the wine and spirits industry have cautioned that companies “have no choice but to increase prices” to maintain viability.
In the preceding year, consumers experienced a 3.6% rise in alcohol duty, resulting in an additional 54p for a bottle of wine and 32p for gin, while draught duty was reduced by 1.7%, equivalent to a penny off a pint.
Concurrently, a new taxation system was introduced that imposed taxes based on the strength of wine. WSTA highlighted that the tax on a bottle of 14.5% red wine has increased by £1.10 since the recent alcohol duty regime was introduced in August 2023.
Alcohol duties are partially determined by the potency of beverages. Several beer brands, such as Foster’s, Carlsberg, Coors Light, and Sol, have decreased their alcohol content in recent months to lower expenses.
Consumer rights expert Martyn James remarked, “Is there a more ironic situation than alcohol duty rising on the very day Dry January ends? For those of us striving to moderate our alcohol consumption, this increase feels like a setback. Shouldn’t we be able to enjoy a celebratory drink without facing additional costs? The government’s decision has definitely dampened the mood.”
Emma McClarkin, the chief executive of the British Beer and Pub Association, expressed concern over the possibility of further price hikes resulting from these changes. She emphasized the strain that this increase places on brewers, who already contend with high beer duty rates in Europe, risking the renowned UK beer industry.
Miles Beale, chief executive of the WSTA, commented on the complexities of price adjustments for the wine and spirit sector, particularly with the new tax system based on alcohol strength. He mentioned the additional challenges businesses face, including NI contributions, business rates, and waste packaging taxes, noting that price increases are necessary for survival.
A spokesperson from the Treasury justified the alcohol duty increase as essential for maintaining fair and robust public finances that support critical public services.
The WSTA provided figures indicating the prices before and after the alcohol duty increase for various beverages.
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