Britons are facing higher prices for their preferred alcoholic beverages starting today due to a new tax increase that coincides with the end of Dry January. Alcohol duty has surged by 3.66%, aligning with RPI inflation rates. This hike translates to an additional 11p on a bottle of Prosecco with an 11% alcohol by volume (ABV), 14p on a bottle of red wine with a 14.5% ABV, and 38p on a bottle of gin with a 37.5% ABV, according to the Wine and Spirit Trade Association (WSTA).
The decision to raise the duty was finalized last year during the Autumn Budget session. Industry leaders in the wine and spirits sector have emphasized that price increments are necessary for businesses to remain viable. Last year, consumers experienced a 3.6% uptick in alcohol duty, resulting in a 54p increase for wine and a 32p rise for gin per bottle, while draught duty saw a 1.7% reduction, equivalent to one penny off a pint.
Simultaneously, a new taxation system was implemented that bases wine taxation on alcohol strength. WSTA reports that the tax on a 14.5% ABV red wine bottle has escalated by £1.10 since the recent alcohol duty structure was introduced in August 2023. Alcohol duties are influenced by beverage potency, prompting several beer brands like Foster’s, Carlsberg, Coors Light, and Sol to lower their alcohol content to cut costs.
Consumer rights expert Martyn James expressed disappointment, questioning the timing of the alcohol duty increase coinciding with the conclusion of Dry January. He highlighted the added financial burden on individuals striving to moderate their alcohol consumption, deeming it an unwelcome development.
Emma McClarkin, the chief executive of the British Beer and Pub Association, and Miles Beale, chief executive of WSTA, echoed concerns about the impact of these changes on the industry. McClarkin emphasized the risk of further price hikes, while Beale highlighted the complexities associated with the new taxation structure and other operational costs necessitating price adjustments to ensure business sustainability.
A Treasury spokesperson defended the alcohol duty increase, stating its role in maintaining robust public finances to support essential services. The WSTA provided a comparison of prices before and after the duty increase for various beverages to illustrate the financial impact on consumers.