Gin boom to be affected by tax increase
Thanks to a surge in popularity of British gin, now dubbed the ‘ginaissance’, it is out performing all other spirit in terms of growth of sales in the UK. The juniper-flavoured spirit now accounts for 68% of the value growth in the spirits sector.
But despite gin proving it is just the tonic for UK business, the nation’s favourite spirit is set to take a hit if the Chancellor goes ahead with planned rises to alcohol duty.
Concern voiced
The Wine & Spirit Trade Association (WSTA) has teamed up with 24 of the UK’s top distillers to voice their concerns to Philip Hammond.
The Chancellor is planning a 3.4% rise in duty in the pre-Brexit Autumn Budget after he froze spirits duty in the November 2017 Budget.
Their message to Hammond is to honour the comments made by Theresa May at her conference earlier this month when she said the Conservatives were “a party that believes in business”.
British gin makers could take a hit of over £16m extra in duties on last year if Hammond puts the boot into booze.
Boosting the British economy
Miles Beale, chief executive of the WSTA, claims the gin boom has allowed British distillers to “invest and grow” their businesses, as well as “boosting the British economy” and "creating new jobs".
“Gin has proved itself to be just the tonic for the Government’s ambitions to grow exports of premium British products,” he said.
“But as things stand, instead of supporting this jewel in the crown of the British drinks industry, the Chancellor is set to raise spirits duty at the next Budget.
“We are calling on Philip Hammond to freeze duty – just as he did last year.
“Yet again it would be a win-win-win – more money for the Treasury, support for British businesses, pubs and the cash-strapped consumer.”
£2bn from British gin
The latest WSTA market report revealed that Brits bought almost 60m bottles of gin in 12 months, worth over £1.6bn which, when you add it to more than £530m worth of British gin exports, breaks the £2bn threshold for the first time.
“After breaking the £2bn mark, British gin has proved itself to be just the tonic for the Government’s ambitions to grow exports of premium British products,” Beale added.
“If gin continues to grow at this rate, there’s no reason why the industry can’t set its sights higher, we could be talking about a £3bn gin empire by the end of 2020.”
What the distillers say:
Dan Szor, founder of the Cotswold Distillery, said:
“My main concern about the proposed increase is that it will stifle the growth of a sector that is flourishing.
“I worked in finance for many years; it’s easy to recognise a strong trend. It’s the small scale, independent producers that are growing fastest in number and fuelling the monumental growth in this category.
“Tax revenues from spirits overtook those from beer for the first time last year and we’re the fastest growing gin market in the world – we would strongly urge the Government not to take steps that will strangle small producers, as a serious downturn would be the inevitable consequence.”
Mark Gamble, founder of Union Distillers, makers of Two Birds Countryside Spirit, said:
“An increase in duty has an impact on both business and consumers who will inevitably see prices rise.
“The knock-on penalty for the whole of the spirits industry will be a slowdown in growth and reduction in sales at a time when we are all looking to future-proof our businesses from the Brexit fallout.”
Kathy Caton, founder of Brighton Gin, said:
“We are so excited that British gin is such a success story, and one where the interest in the category is absolutely being led by premium craft gins such as Brighton Gin.
“Discerning consumers have rightly identified British craft gin as the world's best, but any increase in duty will jeopardise our export plans at just the moment that we are scaling up and gearing for growth".
