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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.


A Fair Freeze For All

A freeze to alcohol duty “represents a favourable outcome for the UK economy” according to a study for the Wine and Spirit Trade Association by independent financial experts.

Freezing the duty on wine and spirits is better for everyone – businesses and consumers but HMRC figures also show it brings in more cash to the public purse.

Despite this Philip Hammond is planning a 3.4% rise in line with inflation which would undermine an industry already facing a tough trading landscape following Brexit’s impact on the pound and rising inflation.

The WSTA is calling on the Chancellor to freeze alcohol duty again, as he did last year, which increased Treasury coffers by £270 million in six months.

A letter written by Treasury Minister Robert Jenrick to Stephen Pound MP last month revealed that Jenrick acknowledged “measures…taken in recent Budgets – have made a real difference and been highly valued by pubs, customers and communities” and the WSTA is urging a similar approach this year.

However, the Minister went on to claim that duty freezes had not been beneficial to the Treasury and “have come at a significant cost to the Exchequer in lost revenues.”

Following independent analysis by EY, the WSTA challenges this view; in fact, the boost in economic activity in the wine and spirit sectors that is supported by a freeze in duty leaves the wider economy better off at no cost to the Treasury.

The WSTA has pointed out the gap between Office of Budget Responsibility (OBR) models and reality, which have been proven to overestimate consumption of wines and spirits over recent years and is urging the Treasury to look again at their numbers before the Budget.

As previously highlighted by the WSTA, the latest HMRC data, following a welcome freeze last November, shows that the Chancellor raked in a £270 million windfall from alcohol duty – a 5% increase on last year.

In March 2017 alcohol duty was hit with an inflationary rise of 3.9%, yet the summer following the rise failed to raise as much for the public purse.

The WSTA warn that a rise in duty would likely result in a reduced economic contribution from the wine and spirits industry.

EY’s report said 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 EY projections show that if alcohol duty is frozen this year it would boost the UK economy by £1.1bn and create an estimated 27,000 jobs by 2022.

Any duty rise that would be announced in the Autumn by the Chancellor would come into force on February 1st, 2019 - a matter of weeks before the Brexit deadline - and would be particularly painful for the wine and spirit trade and its consumers.

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

“The Chancellor got it spot on last year and froze duty, which we know increased revenue for the Treasury.

“UK consumers already pay some of the highest alcohol prices in Europe and it makes no sense to hit wine and spirit businesses, pubs and consumers with a duty rise. But don’t just take our word for it, independent analysis by EY has shown that the best outcome for the economy is a fair freeze for all.

“I’m looking forward to meeting the Minister Robert Jenrick, because we suspect OBR forecasts could be misleading; and data from the real world clearly shows the economic benefit of a freeze. I also wrote to the OBR in 2016 regarding the projections but have not had a reply from them.

“The reality is that freezing alcohol duty is a win/win/win – more money for the Treasury, support for British business, pubs and the cash strapped consumer.

“Any rise in duty would be particularly harmful for importers and small businesses, who are acutely exposed to the risks of leaving the European Union. With Brexit fast approaching duty is one decision which is entirely in the Government’s hands. Any rise would send the wrong signal, undermining UK business and consumer confidence.

“We are asking the Chancellor for a fair freeze for all.”

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.

According to the latest figures from the EY report, the wine industry contributes £7.8 billion in tax to public purse and the wine industry supports 189,000 UK jobs. The spirits industry contributes £9.1 billion to Treasury coffers and supports around 284,000 UK jobs.

The wine industry in the UK contributes £18.9 billion in economic activity after Britain has secured its place as a key hub for importing and distributing wine across the globe.

Partly down to the soaring success of British gin the spirits industry has generated an impressive £30.1 billion in economic activity.

The WSTA is calling on its members and the public to lobby MP’s to highlight the UK’s grossly unfair alcohol taxation policy.

Duty hikes were expected at the 2017 November Budget, but politicians listened to the WSTA, businesses and consumers and scrapped planned duty rises.

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

#fairfreezeforall

British Gin exports show record high for half year sales

Exports of British gin have, yet again, broken records reaching £279 million for the first half of 2018, and the WSTA project that this will be the year that exports reach £600 million for the first time.

Last year overseas sales of the juniper-based spirit broke the half a billion-pound mark for the first time - as £530 million worth of British gin was sold abroad.

Thanks to a surge in popularity of British gin, which has been dubbed the ‘ginaissance’, UK gin exports were worth more in the first six months of 2018 than sales for the whole of 2008, when sales overseas were worth £258 million.

Britain sends more gin around the world than it does beef, and exports of the spirit have increased 19% by value in the last six months.

The USA remains the largest importer of UK gin, with sales to the US worth £93 million, up almost £5 million on the same period in 2017. Australia has also caught on to the British gin phenomenon spending £10.3 million on the spirit in the last 6 months, more than doubling sales compared to the same period last year which were worth £4.8 million.

By region, the EU is still by far the biggest destination for UK gin worth £129 million, with the European market seeing growth of 19% in the first half of 2018.

Within the EU, Spain is the largest market worth £43 million followed by the Germans who are showing a growing interest in British gin. In the first half of 2018 the UK exported £21 million worth of British gin to Germany, £10 million more than the first six months of 2017.

Whilst a much smaller slice of total sales, Asia and Oceania both saw growth. There is lots of potential, the WSTA argues, for exporters to capitalise on the thirst for all things ‘Brand Britain’ in emerging markets.

WSTA Chief Executive, Miles Beale, said:

“The global thirst for British gin continues to grow and there is no doubt that those overseas are drawn to the quality of gin made here in the UK.  Gin is a quintessentially British spirit, and perfect for anyone looking to tap into Brand Britain overseas.

We are, by some margin, the largest exporter of gin in the world, with huge potential for growth, and our industry needs to take further advantage of this. On leaving the EU, we want more government support to increase exports to developed markets such as Australia, Japan, China and the US. The EU represents a huge market for British gin, therefore it essential that we secure frictionless trade with Europe to ensure we maintain our position as the world's largest spirits exporter and further boost the UK economy and provide more jobs.”

In a bid to help boost British gin exports further the WSTA is running a programme of export missions showcasing some of our best spirit producers. The WSTA has already taken British gin to Copenhagen, Madrid, Hong Kong and visiting Tokyo later this year.

Domestic gin sales recorded in the 12 months to the end of March 2018 showed almost 55 million bottles of gin, worth almost £1.5 billion, were sold in the UK, up 28% in volume and 33% in value on the same period the previous year.

A YouGov poll recently found gin is now the UK’s most popular spirit with 29% of drinkers voting it their favourite spirit tipple.

WSTA Announce Keynote Speakers for Annual Conference

The Wine and Spirit Trade Association has announced two highly regarded keynote speakers in advance of their award-winning Annual Conference, taking place on Tuesday 18th September.

Roger Bootle, one of London’s best-known economists and former Special Advisor to the House of Commons Treasury Committee, will be joined by Thomas Matussek, a former German Ambassador to the UK, the UN and India.

The pair will headline the Conference and will answer questions from returning Conference Chair, Alex Forrest, and members of the audience.

Both Roger and Thomas will provide their viewpoints on the WSTA’s key theme for this year’s Conference – ‘Business as un-usual’– Roger from his experience inside the UK’s system, and Thomas from his experience on the outside looking in.

Tickets are on sale now for the conference which is once again taking place at The Royal Institution of Great Britain, 21 Albemarle St, London, W1S 4BS.

The WSTA recently announced the 2018 Conference’s focus on two themes; “Business as un-usual”, looking at the likely change in trading arrangements in an era of uncertain international economics and Brexit, and “The Evolution of the Buyer”, looking at the way the purchase of products and services has evolved in recent years, and what can influence a buyer’s decisions in the world of wines and spirits.

Also recently announced were the panellists for the 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.

WSTA Chief Executive Miles Beale said:

“We are pleased and excited to announce that Roger and Thomas will be joining us this year for what promises to be our biggest and best Annual Conference yet.

“Our Annual Conference falls just before the Brexit ratification process, and I’m sure Roger and Thomas will provide fascinating takes on the Brexit process, alongside our two key themes for this year.

“In addition to our keynote speakers, for the first time at Conference, our smaller WSTA members have the chance to take part in a unique brunch session with members of the WSTA Executive Board, alongside JF Hillebrand, before the Conference proper gets under way.

“It’s a great opportunity to sit down with WSTA Board members, on a one-to-one basis, to take advantage of their wealth of experience and hear sound advice on issues facing their business, and this year’s Conference will have something for everyone.”

Tickets for the WSTA’s 2018 Annual Conference can be purchased here: https://www.eventbrite.co.uk/e/wsta-annual-conference-2018-tickets-42452139492#KeynoteRelease

Heatwave is good news for UK vineyards

The heatwave continues across Britain, bringing perfect conditions for the UK's vineyards and the potential for a record-breaking harvest.

Chief Executive of the WSTA, Miles Beale, comments:

“2018 is set to be a vintage year for English and Welsh wine following a great start to the growing season. The last bumper year for English wine was back in 2014 when good weather created ideal growing conditions for our grapes, with vineyards across the UK producing the equivalent of 6.3 million bottles of English and Welsh wine that year.

“Since then there has been an increase in the amount of land planted under vine, with one million vines planted in each of the last two years and even more due in 2018. Last year around 5.9 million bottles of English and Welsh wine were produced but vineyards are hoping that 2018 will be even better.

“Thanks to a wet spring followed by the heatwave many of our UK vineyards have benefited from early flowering vines leading to generous grape bunches which are ripening well. The weather, so far, in 2018 is shaping up to provide a bountiful harvest.”

The WSTA has recently updated and published its 2018 English Wine Trail, which can be viewed here.

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Thank you again to our sponsors @JFHILLEBRAND - a great event so far #wstaAC wonderful news that you will be spons… https://t.co/AsNvBY0Vs9


A great panel discussion - thanks Ounal, Sam, Sophie and Jerry. It's now time for drinks and networking. #wstaAC

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