GBL shelves new factory after tax hit

GBL International, maker of VK Vodka Kick, has shelved plans to build a new factory because of Gordon Brown's 65 per cent tax hike on spirit-based ready-to-drink (RTD) products last April.

The company had planned to create 200 jobs with a new plant to support its fast-growing VK RTD, of which it sells 3.5m bottles a week.

The chancellor decreed that any drink with a spirit base, such as VK, Bacardi Breezer or Smirnoff Ice, should pay the same tax levied on bottles of spirits.

GBL founder Steve Perez said the tax bombshell and consequent hike in price had halted growth in sales of VK.

"Many retailers used to use VK in price promotions," he said. "Now they use cheaper bottled beers and ciders. The government is effectively making people switch to products that are imported, which is crazy."

The new site, which is adjacent to GBL's Chesterfield base, was formerly a factory making steel pipes and employing 600. It closed last year.

Mr Perez told The Publican that the company had rethought its plans following the Budget. "Gordon Brown has hit a great British success story," he said. "The decision was not very well researched and very simplistic - if a drink has a spirit base it should pay a spirit tax."

The move meant manufacturers of RTDs pay far more in tax than lager and beer producers even though the products have similar alcohol content.

Mr Perez said many manufacturers had reformulated products based around wine or lowered the alcohol content to limit the tax rise. "He's not going to get more tax," said Mr Perez. "He has simply halted the growth."x-ref to HQ feature.