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Business plea for cash lifeline

Created: 23 March, 2020

The UK’s wine and spirit companies have written an open letter to the Chancellor calling on a last-minute reprieve to pay their alcohol duty bills.

With less than 48 hours to go before the UK hospitality sector and their suppliers have to cough up millions of pounds in alcohol duty payments – businesses have issued a plea to hold on to vital funds which will enable them to pay staff and keep companies from collapse.

Last week the Wine and Spirit Trade Association called on Treasury officials to urgently suspend all alcohol duty for a period of at least six months following the escalation of the Coronavirus crisis.

Since then, all pubs, bars and restaurants have been told to close and on Wednesday (25th March) UK wine and spirit companies across the country will have to pay substantial duty bills.

Today 36 businesses have signed a letter to Rishi Sunak MP, backing the WSTA’s call for a duty suspension and give the industry a vital lifeline.

If government agree to an immediate duty suspension, for at least six months, its actions will save UK wine and spirit businesses an estimated £5.8 billion.

It will be particularly welcomed by those pubs and restaurants and their suppliers, where on-trade sales of wines and spirits were worth £11.1 billion in 2019 and who now have lost all their trade.

The WSTA has made it clear that whilst it may appear that off-trade retailers are enjoying a boom in wine and spirit sales, this is likely to be a result of stockpiling and is unlikely to be sustained.

Any duty waiver would not lead to supermarkets generating additional profits because the products they are selling now are already duty paid.

Suspending duty for retailers would allow them to introduce flexibilities to offer support to their suppliers, for example by extending payment schedules; and to meet extra staff costs, warehousing and delivery demands over the forthcoming period.

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

“The letter to the Chancellor signed by 36 UK wine and spirit businesses shows the breadth of the despair being felt throughout the industry.

“On Wednesday many of these companies will have to shell out millions of pounds to the Government at a time when they have no income and many of them are unable to pay their staff wages.

“The Government has pledged ‘to do whatever it takes’ to help businesses, so now is the time to honour this promise.

“It is within the Government’s power to give our great British pubs, bars, restaurants, their suppliers and alcohol retailers an immediate injection of cash that will save many from going under.

“If this doesn’t happen the Treasury’s next collection of duty takings will be considerably lower as many businesses won’t have the funds to adapt and survive.”

Simon Cairns, member of the WSTA and Head of Drinks at the Co-op, said:

“Whilst we are doing everything we can as a retailer to support our suppliers in this unprecedented time, the sudden impact of the closure of pubs, restaurants and hospitality establishments is likely to have catastrophic consequence for the UK’s brewers, distillers and wineries.

“Suspending duty payments will not only ease the immediate pressure on our suppliers’ finances, it will give us time to pull together as an industry and re-structure supply chains, put a specialist workforce in place and enable the industry to rapidly rebound once the threat of Covid-19 has passed.”

Alex Wolpert, founder of East London Liquor Company, said:

“We wholeheartedly support the WSTA’s call for a suspension of wine and spirit duty. Around 40% of the money paid for a bottle of our spirits goes on duty. If government agreed to put a stop to these tax burdens, for at least six months, it would free up vital cash and give businesses like ours some breathing space and a chance of survival.”

A copy of the letter sent to the Chancellor can be viewed here.

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