Spirits producers call for financial protection

27-Aug-2019 - Last updated on 28-Aug-2019 at 09:01 GMT

Freeze plea: spirits trade joins forces to stop duty rise

Gin, whisky, vodka and a host of other UK spirits makers have joined forces in an effort to make the new Chancellor Sajid Javid impose a freeze on spirits duty in the next Budget.

The UK Spirits Alliance (UKSA) was founded in July and is formed of more than 130 members, including the Gin Co-Operative as well as giants such as Diageo, Pernod Ricard and Bacardi.

Currently, the Government intends to increase spirits duty in line with the retail price index in this year’s Budget.

In a letter to Javid, the group acknowledges the Government’s backing of the sector with a “stable excise duty regime”, but highlights the fact Brits still pay some of the highest duty in the world, at over 70% excise duty on national drinks like Scotch and gin.

For instance, a £14 bottle of spirit consists of £10.38 tax. This means spirits duty stands at 72%, which is the fourth highest rate in Europe and one of the highest in the world.

Fix excise duty

“With that in mind,” the letter said to Javid, “we ask you to support the UKSA campaign to fix excise duty – first by freezing it for the length of this parliament then reforming it.

“Government should join us in celebrating the global thirst for British drinks, backing jobs, growth and UK success by fixing spirits duty.”

The number of spirits companies in the sector reached 450 in 2017, rising from 100 in 200, while the number of distilleries in the UK doubled in the past five years.

Spirit duty rates on UK-consumed spirits have increased from £21.35 per litre of pure alcohol in 2008 to £28.74 in 2019.

The Government earned almost £4bn in revenue from spirits duty in 2018, which represented 30% of all tax revenues from alcohol, while more than 20% of UK food and drink exports are spirits.

Meanwhile, the popularity of gin continues to rise with the category’s value increasing by 56% in a year, driven specifically by pink gin, consumers of which have doubled.

Huge growth of gin

A report from data experts CGA into major current gin trends highlights the huge growth of gin and shows on-trade sales reached £1.4bn in the year to mid-May 2019.

It also found that 8.9m people are now drinking gin out of home – up by 2.3m in just 12 months.

CGA director of client services for drinks Jonny Jones said: “This research shows there is no end in sight to the remarkable revival of gin sales.

“From value brands to artisan distilleries, the category is booming to the point where consumers now drink gin out of home more often than vodka.

“They are becoming ever more adventurous and experimental in their purchases, which makes it vital for suppliers and operators alike to obtain the sharpest insights into the latest trends and market preferences.”