Consumers across the United Kingdom are bracing for higher prices on beer, wine, and spirits as a new alcohol duty rise comes into force this Sunday. Chancellor Rachel Reeves confirmed the increase in November's autumn budget, aligning it with Retail Prices Index (RPI) inflation, which will see the tax on alcoholic drinks climb by 3.66%.
Impact on Drink Prices and Industry Warnings
The drinks industry has issued stark warnings, stating it will "have no choice but to increase prices" as the duty hike takes effect. Although manufacturers are the ones who pay the tax directly, industry chiefs caution that a "trickle down" effect is likely to hit shoppers in pubs, supermarkets, and off-licences nationwide.
Specific Duty Increases for Different Drinks
Official data reveals the precise impact on popular beverages:
- A typical bottle of gin, with 37.5% alcohol by volume (ABV), will see its duty increase by 38p to £8.98 after VAT.
- A bottle of Scotch whisky at 40% ABV will experience a duty rise of 39p to £9.51.
- For red wine at 14.5% ABV, the duty will go up by 14p per bottle.
The Wine and Spirit Trade Association (WSTA) highlighted that taxes on red wine at that strength have surged by £1.10 a bottle since the current alcohol duty regime was introduced in August 2023.
Beer Sector Under Pressure
The beer industry is also facing significant challenges. A spokesperson for the British Beer and Pub Association indicated that the cost of a pint at the pub could rise by 2p, with brewers confronting a £130 million increase in costs across the industry. This marks the first time since 2017 that pubs have been impacted by such a duty increase on beer.
Industry Reactions and Calls for Reform
Emma McClarkin, chief executive of the British Beer and Pub Association, expressed concern: "These changes unfortunately increase the likelihood of further price rises, which no brewer or publican would want to inflict on their customers." She added that brewers, who already pay some of the highest beer duty rates in Europe, will see further strain on their "razor-thin profit margins."
Miles Beale, chief executive of the WSTA, pointed to additional burdens: "For the nation's wine and spirit sector the complexities of price changes, especially for wine which is now taxed by strength, mean more red tape headaches ahead." He noted that combined with other costs like national insurance contributions and business rates, businesses have no option but to raise prices to stay afloat, ultimately passing the hit to consumers.
Variations in Duty and Industry Strategies
How much tax is paid on a drink can vary significantly based on its alcoholic strength. For instance, beer below 3.5% ABV carries notably lower duties. In response, some beer brands, such as Foster's, have reduced their strength to 3.4% in an effort to cut duty costs.
The UK Spirits Alliance, representing hundreds of distillers, has written to the chancellor urging an end to "spirits discrimination" and advocating for a long-term approach to duties to provide stability for the sector.
Government Justification and Future Outlook
A Treasury spokesman defended the move, stating: "Alcohol duty plays an important role in ensuring public finances remain fair and strong and funds the public services people rely on every day." However, with the duty rise set to impact a wide range of alcoholic beverages, consumers can expect to feel the pinch in their wallets as prices adjust in the coming weeks.
