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UK’s punitive wine and spirit duty rates are turn off for trade

The WSTA is calling for a freeze to wine and spirit duty in the Budget on November 22nd to help back British business and bolster Brexit trade deal opportunities.

Phillip Hammond is due to increase duty by another projected inflationary rise of 3.4%, in the second punishment Budget of the year, as the Government moves its main fiscal event from spring to autumn.

In March this year the Chancellor raised all alcohol duties by an eye-watering 3.9% which added 8p to an average priced bottle of wine and 30p on a bottle of spirits.

The WSTA is warning that there will be little to celebrate this festive season with duty set to go up again, a month before Christmas, adding another 7p on a bottle of wine and 26p for spirits.

The looming hike in duty causes real concerns for UK wine importers who fear the unappealing duty regime will hamper trade negotiations and damage future investments.

Following the release of the Government’s white paper on trade this week Liam Fox highlighted that imports to the UK were just as vital to the economy as exports.

The wine and spirit trade with the EU is worth almost £4.5 billion to the UK. In 2016 the UK traded £2.2 billion of spirits with the EU and traded just shy of £2.3 billion in wine.

The last time the UK experienced a double hit on alcohol duty increases was almost a decade ago under a Labour government and during the financial crisis of 2008.

Overall plans for an inflationary rise, in a second Budget in November, would cost the wine and spirit industry around £220m in new tax liabilities.

The industry faces £1.9bn higher duty bill by 2022 if rises planned for the duration of Parliament go ahead.

The WSTA is calling on members to lobby MP’s to highlight the UK’s grossly unfair alcohol taxation policy which is leaving everyone out of pocket.

Wine businesses and consumers already pay a staggering £4.2bn in duty each year and spirits consumers and businesses £3.4bn.

Duty is so high that 56% of the average bottle of wine in shops and supermarkets is now taken by the Treasury in tax and VAT and an eye watering 76% of a bottle of spirits.

The UK alcohol industry is one of the most heavily taxed in Europe, with British drinkers paying an extraordinary 68% of all wine duties collected by all 28 EU member states and 27% of all spirits duties. This is by far the most of any member state despite accounting for only 11 per cent of the total EU population.

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


“We are hearing very mixed messages from government. On the one hand Liam Fox is championing the importance of imports to the UK. At the same time Philip Hammond is revving up to hit us with a second inflation busting hike in seven months in alcohol duty – making the UK less attractive to importers.


"Don’t be fooled into thinking that when the Chancellor announces “no change” to alcohol duty plans that he is doing everyone a favour. No change means that duty on all alcohol will rise in line with RPI inflation which in March meant a rise of 3.9%. Next month we are set to see yet another 3.4% added to the staggering amount British consumers already pay in wine and spirit duty.


"Whether it’s English Vineyards, new start up distilleries, producers, distributors or retailers, there are hundreds of British businesses that will be hit hard by another such increase.

"This is why we are calling on our members to contact their MPs and ask the Chancellor to end these unpopular duty rises and support our great British wine and spirits industry. By freezing duty the Government can support British businesses and consumers and even help to increase revenue to the Exchequer.”

The WSTA is arguing that a duty freeze is not only beneficial UK wine and spirit businesses, but also to Government given recent evidence that rebalancing the UK’s unfair wine and spirits tax regime can actually lead to an increase in duty revenues.

HMRC figures show that following the freeze in the 2015 budget, wine duty income actually increased over the following year by £136m (+3.6%) and following the 2% cut to spirits duty that year it actually helped to increased revenues by £124m over the same period.

When spirits duty was frozen in 2016, revenues actually increased by 7% the following year.


WSTA celebrates successful Fringe events

The WSTA have wrapped up two successful Fringe events, at the Labour and Conservative party conferences.

In Brighton for Labour’s Conference, the WSTA’s ‘Gin on the Fringe’ event took place at the British Airways i360, and was hosted by Peter Kyle, Labour MP for Hove. Guests were treated to locally produced gin from Brighton Gin, and wines from both Nyetimber and Fourth & Church, a local wine merchant.

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Peter Kyle MP then took part in a Q&A with Matt Forde, from shows such as Unspun on Dave and Have I Got News for You on the BBC, and discussed his increased majority in the General Election.

In Manchester, the WSTA’s ‘Gin and Tories’ event was hosted by Graham Brady MP at the Epernay Bar, where it was announced that backbench Tory MPs will visit the City of London Distillery to create their own gin, in advance of the 1922 Committee’s 100 year anniversary. City of London Distillery and Berry Bros & Rudd provided drinks to guests on the evening.

Both events were designed to champion Britain’s gin industry, and coincided with the delivery to the Treasury of the WSTA’s Budget submission. During the events, Miles Beale, the WSTA’s CEO, called on MPs to support both the British gin industry and the wider wine and spirit sector in November’s Budget.

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The WSTA’s submission details the enormous amount of duty payable on wine and spirits - £8.05 is paid on duty alone on an average-priced bottle of 40% abv gin, and when combined with VAT this means that 76% of the price is tax. Duty and VAT on an average-priced bottle of wine (75cl) makes up 55% of the cost, with the costs even higher for sparkling wine.

British gin in particular has become a huge success story, and needs the support of Government, in the form of a duty freeze in November, to continue to grow.

MPs also heard across both events how the Government can further support the industry, by encouraging Embassies to routinely serve British gin and English sparkling wines at events. Prioritising Free Trade Agreements with the EU, The Far-East and the USA, all major export destinations for British wine and spirits, would also help producers, the vast majority of which are small and medium-sized companies, to take advantage of the thirst for brilliantly made British drinks overseas.

Latest statistics from the WSTA show that some 36.3 million bottles of gin have sold in the last 12 months in supermarkets and shops, breaking the £500 million barrier for the first time and an increase of £200 million since 2012.

In pubs bars and restaurants, the WSTA figures show a similar upwards trend, with 8.3 million bottles of gin sold worth £687m in the same 12 months.

 

WSTA launches draft Strategic Plan 2017-2022

The WSTA launched its new draft strategic plan for 2017-2022 at its Annual Conference earlier this week.

The plan outlines what the WSTA is seeking to achieve for its members over the next 5 years, and lays out four pillars through which the organisation plans to achieve this.

The WSTA aims to ensure that the wine and spirit industry is:

1. Appropriately taxed and regulated
The WSTA continues to press Government to ensure legislation affecting wine and spirit businesses is proportionate and fit for purpose; will continue to work to tackle all types of fraud; and aims to have wine and spirits recognised in the Government’s forthcoming Industrial Strategy.

2. Internationally focused
The WSTA has increased efforts to help members who want to increase exports. Recent missions to Japan to promote British gin and English sparkling wine, and events in Copenhagen and planned activity in Madrid, alongside a return to Japan and Hong Kong, are evidence of this.

3. Socially responsible
The WSTA has a proud record of working in partnership with Government to introduce voluntary labelling, and to develop local initiatives that tackle alcohol related crime and harm in local communities. WSTA’s work with retailers has led to guidance on the responsible retail of alcohol and policies around underage drinking. Community Alcohol Partnerships which will shortly celebrate its 10th anniversary.

4. Collaborative
The WSTA is committed to working with Scottish Alcohol Industry Partnership, the Welsh Government Alcohol Industry Partnership and the Northern Ireland Alcohol Advisory Group, alongside work with the UK Government and the All Party Parliamentary Wine and Spirit Group in Westminster. Further afield, collaboration with European and International partners, through Comité Vins, SpiritsEurope, the World Wine Trade Group, FIVS and others is also essential.

Speaking at the conference, Miles Beale, Chief Executive, WSTA, described the new Strategic Plan:

“The Plan aims to consolidate all work the WSTA undertakes for members. It also seeks, for the first time, to outline goals we want to achieve as an Association during the next five years, as well as how we intend to achieve them.”

Members are encouraged to feedback on the draft report, which the WSTA is circulating throughout its membership. The agreed Plan will be published around the next WSTA Board meeting, scheduled for October.

Cunard luxury liner launches gin on tap as spirit lovers celebrate World Gin Day

Sales of gin in the UK have grown 12% in volume and 15% in the last 12 months (to 25th March 2017)

World Gin Day (10th June) coincides with an exciting first in the spirits world as cruise liner Cunard start serving guests gin on tap at sea this weekend.

To mark both these ‘gintastic’ events the Wine and Spirit Trade Association has compiled the latest British gin fast facts below.    

Pickering’s Gin has launched a unique collection of gins exclusively for Cunard’s three luxury liners – the Queen Victoria, Queen Mary 2 and the Queen Elizabeth.

To coincide with the £34 million refit of the Queen Victoria - which sets sail on its first voyage around the Mediterranean today (Friday, 9th June) - the ship has been installed with the very first draft gin tap, at sea, serving Queen Victoria Gin.

Pickering’s Gin has a shared history with Cunard as co-founder Marcus Pickering’s great-uncle George Gibbons CBE RD RNR, sailed as captain of Cunard White Star liners from 1909-1944. These ships included: The Majestic, The Aquitania (“The Ship Beautiful”) and the legendary transatlantic liner the Queen Mary in 1936.

Marcus Pickering said:

“Working with Cunard is a dream of mine and the ability for small companies like ours to work with a globally recognised cruising brand has been a revelation. It is proof that it is possible for David to play nicely with Goliath in such uncertain times, and deals like this really help to secure the future of our business. Being a small part of Cunard has delighted my family. I might not be steering the ship, but at least I can lubricate its passengers!”

Based at Summerhall Distillery in Edinburgh, Pickering's Gin, has created three new unique London dry gins one to complement each ship. To find out more about the bespoke Cundard see their press release here.

Chief Executive of the Wine & Spirit Trade Association, Mile Beale, said:

“Now that gin has well and truly proved that it is here to stay we are seeing fantastic new innovations in ingredients and serves. Advances such as the Pickering’s gin tap, on Cunard’s luxury liner, are a great way of showcasing to the world the excellence of British gin. The latest WSTA Market Report shows that consumers are willing to spend more for a quality gin experience. People have increasingly sophisticated palettes and are interested in the locality, provenance and authenticity of what they are drinking. Distillers like Pickering’s are producing and marketing their products to reflect this trend.”

The WSTA has pulled together a round-up of everything you need to know about British gin:

  • Gin sales in our pubs bars and restaurants (on-trade) have grown 12% by volume in the past year (ending 25/03/2017) to 56,000hls (8.1m bottles) worth £655m (+15% on last year).
  • Gin sales in the our shops and supermarkets (off-trade) have grown 12% by volume in the past year (ending 25/03/2017) to 242,000hls (34.6m bottles) worth £471m (+16% on last year)
  • Gin sales combined (both on- and off-trade) reached 298,000 hls in the past year (ending 25/03/2017) equalling 43million bottles, worth £1.1bn
  • The UK drank the equivalent of 1.12bn G&Ts in 2016
  • Gin sales have grown more than any other spirit sold in UK in the last year.
  • The UK hit its largest ever gin exports in 2016 - worth nearly half a billion pounds at £474 million.
  • The UK exports British gin to 139 countries around the world.
    • Since 2000, gin exports have increased by 73% and by value 166%.

  • The UK is the biggest gin exporter in the world. Half of all gin exports (by volume) go to USA and Spain.
  • In March, gin was added to the ONS’ typical shopping ‘basket of goods’ which is used to calculate inflation
  • The growth of gin has helped spirits duty revenues overtake that of beer and contribute more money to the Exchequer, a total sum of £3.4bn.
    • The UK saw a total of 45 new distilleries in 2016, an increase of 17%. Including 5 known licence cancellations in 2016, this brings the total to an estimated 273 distilleries in the UK. It is not known how many of these distilleries produce gin.
  • In the 2016 International Wine & Spirits Competition (IWSC) 96 gins from the UK won medals. This is up from 75 in 2015
  • Mary Berry enjoyed seeing a gin & tonic drizzle cake on GBBO
    • Lord Sugar recognised that gin was the “spirit of the moment” one he tasked his competitors with creating a new gin brand on the hit BBC One show, The Apprentice last year.
    • The popular BBC Radio 4 programme, The Archers, saw Toby begin distilling his own gin in November 2016.  
    • An averaged priced 70cl bottle of gin is £13.66, at 40% abv, £10.33 of this goes on spirits duty.

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