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The Grapevine

The WSTA's views, distilled.

’Drop the Duty!’: whatever the result, thank you for getting involved!

With just a few days left before Budget day, it is worth reflecting on what we have achieved – regardless of the end result. Without a doubt, we have made our voice heard with approaching 90% of MPs in total and almost 95% of Conservative MPs receiving emails - many of them more than six, and some more than 50! To an even greater extent than last year, we have presented a united industry front, while at the same time showcasing the rich diversity of our wonderful industry. Craft distillers and English wine have, rightly, figured more prominently in communications with MPs and in press coverage, in both the trade and national titles.

 

Most importantly, we have made effective use of an independent economic evidence base produced by EY to the extent that no one, either at the Treasury or in Parliament, has dismissed the figures or seriously challenged our arguments – on the potential enhanced contribution to the public finances, to GDP, to job creation or to pubs and the wider hospitality sector. This is both a tribute to the credibility of a compelling case and a reflection of the higher standing of the industry in the eyes of government and Parliament. In short, our contribution is better understood and increasingly appreciated by those in the corridors of power. This is perhaps the biggest gain from two broad based, economically evidence-based and relentlessly positive tax campaigns in two years.

 

None of this tangible change in perception and reputation would have occurred without WSTA members and Harper’s readers being prepared to get stuck in and to throw your own and your company’s weight behind our ‘Drop the Duty!’ campaign. Every email to every MP made an impact, but perhaps the most important effect has been to make our elected representatives realise that our industry is both global and local, is about both big business and normal people - their constituents, their voters. As one MP’s researcher told us, ‘”We see ’Drop the Duty!’ as a constituency-driven campaign. That is why my MP is interested!”

 

This represents real progress and – alongside our achievements towards goals agreed with the Government, notably under the Responsibility Deal and through the growth and success of Community Alcohol Partnerships – it fills me with hope and confidence that the industry is in a far better place at the end of this Parliament than it was at its halfway stage. So thank you for all that you have done and the support you have given: holding off – for now! - the threat of minimum  unit pricing, securing the abolition of the Alcohol Duty Escalator, establishing the WSTA as the key interlocutor with the Government on alcohol issues and changing government’s perception of our industry – from problem provider to responsible economic force. We are in a good place to respond to whatever the next Parliament and next Government brings – from emergency Budgets to ‘son of Responsibility Deal’.

 

 

And what of next week’s Budget result? I don’t have a crystal ball, but I am confident our voice has been heard loudly and understood well. We must hope that the Chancellor has listened and that his Budget enables our rightly proud industry ‘to play its part in the UK’s recovery’ - the words he used when I presented him with the WSTA’s award of thanks on the steps of Number 11 earlier this year. Whatever Budget day brings, please accept a heartfelt thank you from all at the WSTA for your valiant efforts. Here’s to enjoying a small drop and a big cheer…!

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WSTA’s independent streak

I was delighted to be invited to be a panellist at the Harper’s March for Independents event held yesterday.

It was fascinating to hear about the range of business models and different types of diversification, including food offerings, wine clubs, buying groups and on-line retailing.  I think fellow speaker Angela Mount (MW) summed it up when she said it wasn’t enough just to be passionate about wine.

Our panel was looking at new ways for independents to change their business and increase profit.  Hal Wilson (Cambridge Wine Merchants) looked in detail at some of the ways to use in-bond purchases, duty deferment accounts and guarantee exemption schemes to delay the time when excise duty has to be paid, aiding cash flow and profit margin.

I used the opportunity to remind the participants about the obligation of excise traders to be able to demonstrate “due diligence” to HMRC in their business dealings.  Even if a retailer mangers to escape the requirement to demonstrate due diligence themselves, they can expect their wholesalers and suppliers to be required to do so and to undertake regular checks to ensure that their business relationship is on a sound footing.  Moreover, it makes good commercial sense to have robust due diligence processes.

I also spoke about the proposed Alcohol Wholesaler Registration Scheme.  We are expecting this to be introduced in the Finance Bill.  Even retailers who only have small wholesale exposure (beyond the merely “incidental”) will have to register and, when purchasing from UK wholesalers, will have to make sure that their wholesaler is validly registered.  Retailers will need to have processes to check that their wholesaler’s registrations are valid on a regular basis and this links in with the sort of checks that would be expected as part of due diligence.

In some cases, if a trader fails their wholesaler application, their other excise registrations will be at risk, so their whole business is potentially at stake. Failure to comply with the scheme could lead to civil penalties or prosecution. 

The regulatory landscape is particularly active – traders of all kinds will need to remain alert to developments.  This is an area where the WSTA’s knowledge and access to government departments is particularly helpful to members.

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WSTA fighting fraud

WSTA fighting fraud

Alcohol fraud in the UK damages legitimate businesses, brand reputation and deprives the Treasury of duty income. Illicit products also adversely affect consumers and in some cases can cause significant harm. It is estimated that alcohol related fraud costs the Treasury £1.3bn in lost revenue a year. This happens through a range of methods including failure to pay duty, theft from retailers and wholesalers and illicit alcohol.

While the problem is significant, too often information about incidents of fraud, particularly at the retail level, is too fragmented. The WSTA takes this issue very seriously on behalf of our members and has therefore been working on a number of initiatives to support them to tackle this problem.

We are pleased therefore to announce that the WSTA has launched a new confidential fraud reporting tool at www.wstafraudreport.co.uk.  This allows anyone to report a suspected fraud on a simple form on a confidential basis and this will plot the incident on an online map with a link to the details that have been submitted. With the ability to identify hotspots and trends, we will be able to share anonymously this with law enforcement colleagues to help inform their response.

For this resource to be successful, we are urging members (particularly retail members and wholesalers) to identify concerns and actively report them, as well as actively support the initiative and publicise this site in their own businesses websites.

We have deliberately tried to keep the site simple and business-like, with only a small amount of information being sought and we will be refining this in the light of experience.

Once a report is submitted, it is invisible to the person submitting it for data protection reasons.  We will be notified when each report is made and assess it before it goes on the system or is shared with law enforcement.

I am confident this will be a welcome addition to the range of reporting mechanisms currently available and go a long way in our fight against alcohol related fraud.

For more information you can visit http://www.wsta.co.uk/what-we-do/policy/133-info/607-fraud-prevention-unit

 

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Just 93 days to go...

The outcome of the next General Election is far from predictable, but one thing is for certain and that is whoever forms the next Government after polling day in 93 days’ time will have a big impact on the wine and spirit industry.

With key policy issues such as taxation, licensing, labelling, and the responsibility agenda all to be looked at and decided on by a new Government, potentially a coalition of two or more parties, we at the WSTA were keen to ensure that political parties were not only made aware of the impact they had on the industry, but also understood what policies they could adopt in order to help us grow, create jobs and further support our consumers.

Last week we therefore published our Election Manifesto outlining a positive policy programme that covers all of the issues on which we work. We will be sending these to the political parties and asking them to support the industry through adopting these policies. Some of the commitments in the manifesto include:

Business and tax - In addition to the 2% cut in duty that we are calling for in our budget campaign (www.droptheduty.co.uk), we are also asking party leaders to visit a distillery and a vineyard during the election campaign. This will give the opportunity to speak to those working in the industry about the problems they face and understand why we are calling for more support. We are also asking the Government to work with the trade on helping to develop qualifications for those that work in the wine or spirit industry and for them to look at introducing a lower duty rate for micro distillers which had such a positive impact when introduced for micro brewers.

Alcohol related harm - The WSTA takes its work around alcohol responsibility very seriously and is a commitment partner with the Government in delivering the Responsibility Deal pledges. Yet too often Government intervention is not targeted on those that misuse alcohol. We are therefore asking for a break in the constant changes to the Licensing Act and asking the Government to focus policies instead on the minority who misuse alcohol. We are also calling for alcohol education to be a feature on the national curriculum and for the Government to protect the safer drinking guidelines that are now on over 80% of labels.

Agriculture and consumer awareness - With the growth of the English wine industry we are looking to highlight the agricultural importance of the sector by asking parties to consider looking at tax incentives for those that invest in vineyards and ensuring that UK vineyards have access to regional development funding to support improvements to the landscape. We are also looking to engage with the Government on the issue of labelling, including calorie labelling, which is currently being considered at EU level.

These are just some of the highlights, the manifesto itself contains many more. If you want to know more about the commitments we are asking for you can find the full manifesto at the following link: http://www.wsta.co.uk/images/PAN/manifesto/Manifesto2015.pdf

A two page version is available here: http://www.wsta.co.uk/images/PAN/manifesto/Manifesto2pg.pdf

The infographics are available here: http://www.wsta.co.uk/images/PAN/manifesto/Manifestographics.pdf

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The great glass rollercoaster

A case study into how the WSTA works for its members.

At the beginning of 2012 the cost of recycling glass, more specifically the cost of glass Packaging Recovery Notes (PRN), stood at a stable average of £10 per tonne. However a combination of tougher recycling targets from the Department of Environment and failures in the PRN market saw this price rocket to a peak in 2013 of £85 per tonne, a staggering 850% increase.

At first one or two members highlighted this issue to us, hugely concerned about the impact this was having and, in one instance, threatening the future viability of a  business.  After further inquiry it became clear that this wasn’t just a minor issue affecting a few people, but a cost burden that was having a major impact on cash flow and producers’ bottom lines across the trade. We calculated that when PRN prices were at their peak, producers had to find an additional £51m per year to cover the costs.

We knew we needed to act and so the WSTA took a leading role in co-ordinating the response across the trade. First, we coordinated an industry lobby of the then Minister which led to a review of glass recycling by the Advisory Committee on Packaging in 2013.  The review concluded, amongst others, that the recycling targets had been based on a significant over-estimation of the amount of glass circulating.  In a nutshell, businesses had to recycle more than they needed to and this was putting a strain on the supply chain forcing prices up.

We were delighted that the Minister took on board our concerns and the Department announced earlier this year it would revise downwards both the estimate for the amount of waste glass produced annually and also the business recycling rates for glass. The recycling rate for obligated businesses came down from 81% to 75% in 2014.  

We then looked to address the failures in the PRN market. A major criticism of the PRN system has been a lack of transparency about PRN prices which has undermined industry confidence in the system. In order to make this more transparent, the WSTA has now launched a dedicated website page for our members that will provide weekly updates, in partnership with The Environment Exchange, of PRN prices.

WSTA Members can access the prices here: http://www.wsta.co.uk/packaging-recovery-note-prices

Now they will be able to see what else is happening in the market and whether the prices they are paying their current compliance scheme are in line with the market price. In addition we are working with complydirectto develop a compliance scheme specifically tailored for the needs of WSTA members.

This action has thankfully helped to bring a costs down to a more acceptable level, now nearly to £20 per tonne, significantly easing the pressure on the trade. While we cannot always foresee when an issue like PRNs occur, when they do the WSTA is on hand to support our members to navigate them as best we can.

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