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UK Wine Industry Tells Chancellor: ‘Show your Support’

The Wine and Spirit Trade Association has urged the Chancellor to consider the huge contribution the UK’s wine industry makes to the economy when he delivers his Budget statement next week.


Britain’s wine importers, bottling plants, distributors, retailers and logistic companies employ around 170,000 people, and in 2017 paid almost £4.7 billion in duty payments to the Treasury, more than any other alcoholic drink.


This substantial figure is only set to increase as Philip Hammond plans to raise the rate of duty by around 3.4% in his Budget statement next week.


The WSTA argues that the planned increase would further undermine an industry that is already facing a tough trading landscape, following the impact of the anticipated Brexit fallout on the pound, and rising inflation.


The UK wine industry is the second largest global importer of wine, both by volume and value, with 99% of wine consumed in the UK being imported.


The wine industry is therefore uniquely exposed to the risks associated with a badly managed Brexit, and the Government must do all it can not to compound pressure on the trade - the WSTA is asking the Chancellor not to inflict a painful rise in duty on business and consumers next week.


Despite the vital contribution of wine duty to Government coffers, and the abundance of employment the sector supplies, the Government has too often failed to support the UK’s wine industry.


Since 2010, wine duty has increased by 28%, adding 48p in duty to a bottle of still wine, and wine duty has been frozen just twice in the last 15 years.


There is some cause for optimism, however - Philip Hammond froze duty on alcoholic drinks last year, and the WSTA has, along with 16 key players in the UK’s wine trade, written to the Chancellor both to thank him and to underline the need for more consistent support to redress decades of unfair treatment by his predecessors.


Wine duty rises wouldn’t just be bad for business – wine is now the UK’s most popular drink, with 64% of UK adults saying they drink wine (the equivalent of 33m people) and rises will hit consumers in their pockets too.


55% of the money Brits pay for an average priced bottle of wine is tax, including the equivalent of £2.16 in wine duty. It is even more for a bottle of sparkling wine at £2.77.


The Chancellor’s planned rises would add 7p on a bottle of still wine and 9p on a bottle of sparkling, with previous WSTA figures already released having shown that, since the Referendum result was announced and Britain began navigating a course away from the EU, an average priced bottle of wine has reached £5.68 - a 28p rise and an all-time high.


As prices rise, the WSTA’s latest Market Report revealed that volume sales of wine in the UK have been affected, and that, as an import product, wine is highly sensitive to market conditions.


By freezing duty next week the Chancellor has the opportunity to put the brakes on further price rises.


After a freeze in wine and spirit duty in the November Budget last year, between February to August 2018, wine duty income increased by £39 million, up 2% on the same time last year, and a report commissioned by the WSTA through EY notes that a freeze “represents a favourable outcome for the UK economy”.


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


“The wine industry is, unfortunately, no stranger to harsh treatment from Chancellors. Since 2012 wine overtook beer as the largest contributor to the public purse through duty payments, and no alcoholic drink has paid more to the Treasury since then.


“This cannot continue indefinitely, and we are now telling the Chancellor that enough is enough. He needs to lend the world leading UK wine industry his support.


“We welcomed a freeze from Philip Hammond last year, but there is so much more that needs to be done to unpick decades of unfair treatment and above-inflation rises, often inflicted whilst other, less popular alcoholic drinks enjoy more favourable treatment. Any rise in duty would be particularly harmful for importers and small businesses, who are uniquely and acutely exposed to the risks of leaving the European Union.


“We have heard talk over the last 18 months of ‘taking back control’ – In this case, the government should exercise the control it already has, and show some support for our wine industry and freeze duty rates.”

 


Gin is just the tonic for British business

Gin makers across the country have joined forces to call on the Chancellor to freeze spirit duty and show he is backing British business.


The Wine and Spirit Trade Association teamed up with 24 of the UK’s top distillers to write to Philip Hammond, raising serious concerns over a planned increase to spirits duty at the Budget this month.


The message to Hammond is to honour the comments made by Theresa May at Conference when she said the Conservatives were “a party that believes in business”.


British Gin makers could take a hit of over £16 million extra in duties on last year if Philip Hammond puts the boot into booze at the Budget and raises duty again.


The planned 3.4% duty rise would add another 26p on a bottle of spirits. 75% of an average priced bottle of spirits goes straight to the taxman, with £8.05 for every 70cl bottle of gin at 40% abv going on duty.


Entrepreneurial spirit makers are warning that the tax burden will stifle the growth of innovative, creative start-ups who have helped drive the gin renaissance and allowed British gin to break records both home and abroad.


The latest WSTA market report showed gin broke the £2 billion mark with sales doubling in value in the last five years.


Brits bought almost 60 million bottles of gin in 12 months, worth over £1.6 billion which when you add it to over £530 million worth of British gin exports breaks £2 billion for the first time.


The latest HMRC figures showing 315 distilleries are currently operational, with 49 openings in the last year, and more than double the number that were operating 5 years ago.


Thanks to a surge in popularity of British gin, which has been dubbed the ‘ginaissance’, gin is out performing all 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.


Gin sales 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.


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.


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

“Government has vowed to back British business. Well you can’t get much more British than gin! After breaking the £2 billion-mark British gin has proved itself to be just the tonic for the Government’s ambitions to grow exports of premium British products. 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.


"However, if the Chancellor does not freeze alcohol duty he will be stifling the spirits industry. British gin is a global phenomenon which is why we are asking the Chancellor why he is penalising what Britain does best? By freezing spirit duty, he would be allowing industry to invest, create jobs and grow while at the same time boost Treasury coffers.”


In November the Chancellor put a freeze on alcohol duty and received an extra £380 million in between February and August, up 6% on the same period the year before. Over £160 million of that windfall came from spirit duties up 9% on the previous year.


The UK gin industry paid over £750 million in duty and VAT in the last 12 months.


If the planned duty rise goes through, gin duties could cost UK distilleries the equivalent over £50,000 each next year. For start-ups and SME’s in particular this is a burden that would hold back business ambitions.


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.
Dan Szor, founder of Cotswold Distillery, said:


“My main concern about the proposed increase is that it will stifle the growth of a sector that is flourishing. I worked in finance for many years; it’s easy to recognise a strong trend. It’s the small scale, independent producers that are growing fastest in number and fuelling the monumental growth in this category. Tax revenues from spirits overtook those from beer for the first time last year and we’re the fastest growing gin market in the world – we would strongly urge the Government not to take steps that will strangle small producers, as a serious downturn would be the inevitable consequence.”


Mark Gamble founder of Union Distillers makers of Two Birds Countryside Spirit said:


“An increase in duty has an impact on both business and consumers who inevitably will see prices rise. The knock-on penalty for the whole of the Spirits industry will be a slowdown in growth and reduction in sales at a time when we are all looking to future proof our businesses from the Brexit fallout.”


Kathy Caton, founder of Brighton Gin, said:


“We are so excited that British gin is such a success story, and one where the interest in the category is absolutely being led by premium craft gins such as Brighton Gin. Discerning consumers have rightly identified British craft gin as the world's best but any interest in duty will jeopardise our export plans at just the moment that we are scaling up and gearing for growth".
The gin distillers’ plea for a freeze comes two weeks after frustrated English wine producers signed a joint letter to Hammond calling for him to scrap planned wine duty hikes and support the home-grown wine industry.


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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.

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.”

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.

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