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British pubs are put at risk by Chancellor’s plan to penalise alcohol

The Wine and Spirit Trade Association are calling on the Chancellor to back British pubs and scrap his punitive plan to raise alcohol duty.


Wine and spirit sales in UK pubs account for 36% of the value of alcohol sold, worth almost £6 billion to pubs which is an increase of some £270 million, up 5% on last year.


The great British pub has seen a huge increase in sales of sparkling wine and gin in recent years thanks to the popularity of sparkling wine and the ginaissance.


In the last five years Brits have bought over 24 million bottles of sparkling wine worth over £600 million in British pubs. Five years ago, pub goers spent less than £200 million on fizz.


It’s a similar story for gin which brought in around £620 million to pubs last year, £190 million more than the previous year. The gin menu is now a common feature in British pubs with most bars choosing to stock a range of different gin brands.


Research by CGA Strategy on behalf of WSTA shows that, on average, 4 new spirit brands were added to the back bar since 2013, meaning that there is now on average 36 spirit brands behind the bar of a typical pub.


Brits’ love affair with gin has meant that in the last 12 months the juniper-based spirit has accounted for over half of all value growth in UK pubs. Gin sales in pubs grew by an astounding £190 million compared to beer sales which grew by an extra £58 million.


Despite the boost gin and fizz has brought UK pubs continue to remain at threat of closure stifled by the UK’s excessively high duty rates.


Landlords across the country have had to dig deep to pay huge duty bills, totalling over £820 million on wine and spirits alone, into the Treasury coffers. This is the equivalent of almost £17,000 per pub.


The total duty collected from British pubs in the last 21 months has hit £2.1 billion. But there is worse news to come for the pub trade - if Philip Hammond increases the already excessively high duty rates on alcohol, pubs across the country stand to lose an extra £28m next year - £558 per pub.


The WSTA recently commissioned a study by one of the world’s biggest accounting firms, EY who concluded that a freeze to alcohol duty is “the most favourable outcome for the UK economy”.


In November the Chancellor put a freeze on duty and received an extra £380 million in between February and August, up 6% on the same period the year before.


Philip Hammond’s planned 3.4% rise in line with inflation would undermine an industry already facing a tough time with CAMRA estimating an average of 18 pubs closing a week.
A further 3.4% duty rise would add another 7p on a bottle of still wine, 9p on a bottle of sparkling and 26p to a bottle of spirits.


The WSTA are calling on Philip Hammond to echo his actions from the November Budget and freeze alcohol duty to support the historic British pub following a spate of closures.


During his Budget speech in November, the Chancellor said: “Recognising the pressure on household budgets and backing our Great British Pubs, duties on other ciders, wine, spirits and on beer will be frozen.”


The UK alcohol industry is one of the most heavily taxed in Europe, as we are stung by the third highest duty rates for wine and fourth highest duty rate for spirits across the EU.
Miles Beale, Chief Executive of the Wine and Spirit Trade Association said:


“The Chancellor can once again show his support for the great British pub by scrapping his plans to raise already punitive duty rate.


“Wine and spirits are increasingly vital to the prosperity of our historic British pubs with wine and spirt duty accounting for more than a third of annual pub sales. We are calling on Philip Hammond to recognise the importance of wine and spirit industry and help save our British pubs by freezing duty, allowing them to reinvest and stay in business.


“It is proven that freezing alcohol duty has brought in more revenue for the Treasury coffers, not less. So a duty freeze makes sense for everyone – from the Chancellor, to pub and bar owners, and consumers.”


English wine makers gulp at the UK’s excessively high wine duty

Philip Hammond is being urged to scrap planned tax rises to support the home grown English and Welsh wine industry.


Frustrated English wine producers have put their concerns over Government’s lack of support for the industry in a letter to the Chancellor and Environment Secretary Michael Gove calling for a freeze on wine duty.


In the letter signed by 13 of the WSTA English wine members says the significant tax burden is restricting growth and is damaging to rural communities.


The English and Welsh wine industry are currently reaping the benefits of the record heatwave this summer which has provided near perfect grape growing conditions.


In the last ten years the area of planted vines has more than doubled with a record-breaking one million vines planted in each of the last two years and even more due in 2018.


However, the celebrations surrounding a bumper harvest are set to be overshadowed by bad news from the Chancellor next month if he goes ahead with planned 3.4% duty rise in line with inflation.


Thanks to this year’s plentiful harvest the Chancellor is set to receive an extra boost in Treasury coffers when the 2018 vintage goes on sale.


Britain’s biggest wine producers want to understand why the Government insists on taxing what we do best most heavily.


Miles Beale, Chief Executive of the Wine and Spirit Trade Association said:


“English wine is a great British success story and we are now proudly producing top quality wines which are rivalling the best fizz from around the world.


"2018 has so far been a vintage year for English vineyards who are reaping the benefits of the record heatwave. The knock-on effect of near perfect growing conditions in the UK has led to high quality generous grape bunches and many vineyards have experienced their earliest harvests ever. With the good weather continuing into October our English wine makers are reporting a bumper harvest.


"But the Chancellor is planning to take the fizz out English wine makers success by adding to its already high tax bill this year, hampering the industry's ability to grow, invest export and create jobs. We therefore urge the Chancellor to support this home-grown industry and freeze duty in this month’s budget.”


Chris White, CEO of Denbies Wine Estate in Surrey, said:


“This action is necessary in order to support the current demand for English wine and the growth of the industry. A duty freeze would also stimulate further our opportunity for export. We would like to see the Government adopt a model employed in all other EU countries where the lower duty rate has helped support the growth of their wine industry.”


Simon Robinson, Chairman of Hattingley Valley in Hampshire said :

“The English and Welsh wine industry is a bright spot of the UK economy which is set to flourish so long as the Government provides a stable and supportive environment. Growth in the industry will provide significant rural employment and development as well as significantly underpinning developments in tourism. Increasing duty on our products is not helpful, especially when one considers the considerable additional revenue which will accrue to Government from increased employment in the industry.”


In November last year the Chancellor delivered a welcome freeze to alcohol duty leading to an extra £380 million windfall from alcohol duty, between February and July, an increase of 6% on the same period last year.

Duty is currently so high that 55% of an average priced bottle of wine sold in our shops and supermarkets is now taken by the Treasury in tax and VAT.

A further 3.4% duty rise would add another 7p on a bottle of still wine, 9p on a bottle of sparkling.

The UK alcohol industry is one of the most heavily taxed in Europe. The current Chancellor’s harsh duty policy is a stark contrast to how other countries treat their vineyards and wine makers.

Around two thirds of the wine made in England and Wales is sparkling wine which attracts the most duty, at £2.77 on a bottle of fizz. UK consumers pay £2.16 for a bottle of still wine.

In France, where the wine industry is heavily supported, consumers pay the equivalent of just 7p a bottle on duty for sparkling and 3p for still.

In the EU only Ireland, with no domestic wine industry, has a higher rate of excise duty on sparkling wine.

Outside the EU in New Zealand they pay less than half the duty at £1.10per bottle of still or sparkling wine.

English sparkling wine has been gaining international recognition over the past few years, leading to a trophy cabinet bursting with awards and attracting Champagne houses, such as Taittinger and Pommery, to invest in English vineyards.

The latest data shows last year consumers drank 35% more English sparkling wine than they did in 2013.

There are over 500 Vineyards in England and Wales and around 150 wineries producing almost 6m bottles of wine a year.

WSTA believes firmly that a ‘no deal’ Brexit would not be acceptable

The Wine and Spirit Trade Association shone a light on Brexit branding it “by far the most significant short-term challenge” facing the sector at their Annual Conference this week.


Chief Executive Miles Beale used his speech to highlight frustrations facing the trade and introduced two keynote speakers chosen for their differing views on the Brexit debate.


One of London’s best-known economists, Roger Bootle went head to head with former German Ambassador to the UK, Thomas Matussek to discuss how the impact of Brexit.
Matussek told guests at the Royal Institute of Great Britain that Britain being part of the EU brings “more muscle to the table”.


He told WSTA members that he was in favour of a second referendum and admitted he hopes the UK will be back.


Matussek added: “Britain is family” and thinks the UK “would be welcomed back with open arms”.


Bootle pulled no punches when he described the Chequers agreement as “an appalling set of proposals” and blamed “personal political ambitions” for clouding the debate about economics and trade.


Bootle added that he didn’t think the EU was “likely to survive” citing Italy, Poland, Hungary and even France as posing “huge problems” for the EU in the future.


During the grilling, chaired by broadcaster Alex Forrest, both agreed that a Canada plus style deal was “the way forward”.

 


In his conference speech Miles Beale, Chief Executive of the Wine and Spirit Trade Association shared his views on how Brexit plans have progressed, or rather haven’t progressed.
He told the conference:


“The WSTA has long been holding seminars and meeting members to talk through what the consequences of a ‘no deal’ scenario might look like and what companies should be doing to mitigate the risks associated with a hard Brexit. I have to say we are underwhelmed with what we have seen from Government. Information is too basic and ducks most of the questions we have been asking.


"A deal on the Withdrawal Agreement is neither far off nor is it far-fetched. WSTA believes firmly that a ‘no deal’ Brexit would not be acceptable. Glib political statements about the UK being able to thrive under WTO terms are just that - glib. They fail to take into account the damage that the inevitable short-term disruption at our borders. And there will be disruption because whatever the Government has said about UK controls – they have no say in the controls on goods, vehicles and people leaving the EU for the UK or entering the EU from the UK. So that’s why it’s essential that the Government secures a negotiated withdrawal.”


Miles also took the opportunity to propose a way through the border checks when we leave the EU.


He said: “I see absolutely no reason why EMCS could not be used as a model for how to move goods – all goods not just alcoholic drinks – between the UK and EU once we have left the EU. Place the onus on importer for product safety – as is the case now – and make use of technology and there’s a plausible – and, more importantly, tried and tested, model.”


The keynote speakers were followed up by a panel session on “Evolution of The Buyer”, including Sophie Devonshire, CEO of The Caffeine Partnership; Jerry Perkins, CEO of Wasted Talent Ltd; Sam Bompas, Co-founder, Bompas & Parr; and Ounal Bailey, Co-Founder, Wisehead Productions.


The panellists switched the discussion from politics to how brands can better engage with consumers.


In a lively debate they covered topics like how to use social media, innovation and what that really means as well fulfilling the needs of the customer.


In addition to the speakers, for the first time at Conference, the smaller WSTA members were given the chance to take part in a unique brunch session with members of the WSTA Executive Board.


Miles Beale added:


“We are delighted with how the Annual Conference went. The event takes a great deal of planning but it’s certainly worth it when you hear members saying they have learnt something new and thoroughly enjoyed the event. We are always looking for new ways to get members more involved and give them food for thought.”

 

Brexit causes wine prices to rise - now Chancellor wants to heap MORE pain on consumer

The Wine and Spirit Trade Association’s latest Market Report has revealed the average price of a bottle of wine has risen by almost 30p since the vote to leave the EU.

For UK wine lovers there is worse news to come as these figures do not take into account the impact of a painful planned 3.4% rise on alcohol duty expected to be delivered by the Chancellor in the Autumn Budget - adding another 7p to the average priced bottle of wine.

Before the referendum result an average priced bottle of wine sold in the UK was £5.40, the latest figures reveal that an average priced bottle of wine has reached £5.68.

The impact of Brexit saw the value of the pound plummet and has pushed up the cost of imports leading to rising inflation. WSTA Market Reports show that in the 18 months running up to the vote wine prices remained stable but since then have increased by 5%.

In October 2016 the WSTA warned wine drinkers they should expect wine coming into the UK from the EU to go up by an average of 29p a bottle as a result of Brexit. If government does not start supporting the UK wine industry the cost of wine could be ramped up even further.

As prices rise the WSTA Market Report also reveals that volume sales of wine in the UK are down dramatically. Between 2012 and 2015 wine volumes declined by 5%, but between 2015 and now, volumes have plummeted by 17%.

In the 12 months to mid-June out of the top ten countries selling the most wine to UK restaurants and bars, eight of those show declining sales. Only Italy – down to the popularity of Prosecco – and New Zealand have grown.

Following the EU Referendum in 2016 the UK wine industry has done its best to absorb rising import costs, but as predicted it was only a matter of time before any cushioning against the effects of a weaker pound ran out and costs were passed on to the consumer.

This has been exacerbated by extreme weather, with both frost and drought across Europe, production in major markets like Italy, Spain and France were down last year. In May this year Bordeaux was struck by one of the worst hailstorms in recent memory and markets for New World wine are also suffering, with wildfires in the USA dramatically reducing their production.

Miles Beale Chief Executive of the Wine and Spirit Trade Association said:

“The WSTA predicted that Brexit and the fall in the value of the pound, compounded by rising inflation, would force the UK wine industry to increase prices. Sadly, this is now a reality with the average priced bottle of wine in the UK now at an all-time high.

The Chancellor can take action to help both our industry and the consumer by freezing duty in his November Budget. Currently, duty is set to rise in line with RPI inflation, which in the current economic climate, not to mention price rises as a result of Brexit, is a painful and unnecessary blow to an industry that already has more than enough to contend with.

99% of the wine drunk in the UK is imported, making a no deal Brexit an extremely alarming prospect, particularly for those working in the wine industry. However, the one thing that is within the government’s control is excise duty. Government must start showing its support for the UK wine industry - and nearly 190,000 jobs that our industry supports - by tackling our excessive duty rates and freezing duty at the Autumn Budget.”

Wine is now the UK’s most popular drink. 64% of Brits drink wine, the equivalent of 33 million people.

55% of the money Brits pay for a bottle of wine, the equivalent to £2.16, goes on wine duty. It is even more for a bottle of sparkling wine at £2.77.

Fourteen countries in the EU have zero rates for wine and therefore only 21% of a bottle of wine sold in France or Spain is taken up in tax and 19% in Germany.

The UK wine industry contributed over £7.8 billion to the Treasury last year, and acts as a global hub for wine production. Much of the wine that is originally imported here is then reshipped to the EU, as well as markets further afield, particularly to the Far East and countries like China, Singapore and Hong Kong.

The UK is at the centre of the global wine trade accounting nearly 15% per cent of the world’s wine imports. The UK is the 2nd largest trader by volume (behind Germany) and by value (behind USA), cementing its role as a key international player.

Following independent analysis by EY, on behalf of the WSTA, their report found a duty freeze results in: “a favourable outcome for the UK economy, since economic activity is significantly higher”, while there is expected to be a “negligible impact on tax revenues”.

The WSTA has drafted a Budget submission document which has been submitted to the Treasury this week, clearly setting out that a further freeze on duty for all alcohol products will help an aspirational and innovative industry realise its potential.

#fairfreezeforall

Gin breaks £2 billion mark – doubling in value in 5 years

The Wine and Spirit Trade Association’s latest market report shows the summer of 2018 reached record highs for gin with sales, both home and abroad, peaking at £2.2 billion.

The records show that combined yearly sales of gin in the UK and British gin overseas have doubled in the last five years. In 2013 the total value of gin sales, UK and exports, reached just over £1 billion.

The latest figures taken from the WSTA’s yet to be published Market Report show that in the 12 months to June this year sales in the UK were worth over £1.6 billion, up 38% on last year.

Brits bought almost 60 million bottles in our shops, supermarkets, pubs and restaurants which means the equivalent of an extra 14.4 million bottles were sold in the UK, worth an extra £516 million, compared to last year.

Add to this the £532 million worth British gin exported in the last 12 months, according to HMRC, gin has broken the £2 billion mark as predicted by the WSTA last month.

Thanks to a surge in popularity of British gin, which has been dubbed the ‘ginaissance’, gin is out performing any other spirit in terms of growth of sales in the UK. The juniper-based spirit now accounts for a whopping 68% of 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 in the Autumn Budget.

Philip Hammond is planning a 3.4% duty rise in line with inflation which would undermine an ambitious industry looking to go global.

The rapid growth in UK distilleries and an increasing number of gin brands launched to market on top of the heatwave of 2018 has helped gin sales grow beyond expectations.

 

Miles Beale Chief Executive of the Wine and Spirit Trade Association said:

“Gin has proved itself to be just the tonic for the Government’s ambitions to grow exports of premium British products. On top of that the gin boom in the UK has allowed our talented and innovative British distillers to invest and grow their businesses creating new jobs and boosting the British economy. 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 £3 billion gin empire by the end of 2020.

“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. UK consumers already pay some of the highest alcohol prices in Europe. 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 business, pubs and the cash strapped consumer.”

 

For every 70cl bottle of gin at 40% abv £8.05 goes straight to the Treasury. That’s 75% of an average price bottle of spirit is taken up by duty and VAT. Spirits paid £3.4 billion in duty in 2017/18, accounting for 30% of all alcohol duty income.

Following the freeze in spirits duty in the November 2017 budget, spirits duty income between February and June increased on the same period the previous year by £93m (+7%).

Last year an IWSR Forecast Report projected that gin is expected to grow by 37% by 2021.

Britain now boasts 315 distilleries in the UK – more than double the number that were operating across the country five years ago.

There are now well over 100 British gin brands on the market - it is hard to put an exact number on it as new gins come on the market so frequently. What we do know is that the number of gins now available in Britain has more than doubled since 2011.

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