Duty increase a “hammer blow to British wine industry,” says trade body

Posted on 2 Nov 2018 by The Manufacturer

The commerce organisation representing Britain’s wine and spirits industry has expressed dismay at the rise in the duty level on wines in this week’s Budget.

Wine Cider Spirits Food Drink - Stock
The duty rise would put further risks on an industry that already contributes almost £10bn to the UK economy.

The British Wine and Spirit Trade Association’s (WSTA) director, Miles Beale, has called the decision to increase the wine duty rates “grossly unfair, unjustified and counterproductive” and a “hammer blow to the wine trade.”

Last year, the tax raised £4.7bn for the Treasury, more than any other alcoholic duty. The WSTA claims the duty rise would be bad for business that would disproportionately affect small businesses and importers.

In a statement, Miles Beale, the association’s chief executive, said that the Chancellor’s announced rise will “clobber wine importing businesses, including thousands of SMEs; stifle growth of our flourishing English wine industry and; raise prices for consumers.”

“The failure to rebalance this unfair tax burden on the wine industry will stifle business’s ability to invest and grow and damage the sector which last year brought in almost £19bn in economic activity.”

He added that Brexit and the increase in inflation are already causing difficulties for the wine industry, due to the weakened pound increasing the cost of wine imports. The wine sector is highly reliant on imports; 99% of wine consumed in Britain comes from abroad, according to the WSTA.

Though condemnatory of the wine duty increase, Beale praised the freeze in spirits duty, saying, “it will give UK spirit producers the confidence to continue to expand their export markets and seek to take advantage of future trading opportunities.”

Duty on a 750ml bottle of wine will go up by seven pence to £2.23, while duty on 750ml bottles of sparkling wine and fortified wine will go up by nine pence, to £2.86 and £2.98 respectively.

Miles Beale was recently interviewed by The Manufacturer’s Editorial Director, Nick Peters. He addressed the multiple concerns Brexit is causing the wine and spirits industry, and highlighted recruitment in particular.

“If you’re an English vineyard, you absolutely need seasonal workers,” said Miles. “A couple of our members have tried to use UK-based workers and they just aren’t good at picking fruit, and there is no one left from the previous generations who used to do it.

“We therefore use fruit pickers who come over from mainly Eastern Europe, picking different fruits at different times across the rest of the EU.”

He said a workable transition agreement would help address the matter in the short term while a visa scheme for seasonal workers would solve labour issues in the medium term.

The government have announced a pilot visa scheme that will allow up to 2,500 workers a year to work on British farms. The initiative is set to commence in spring 2019; but the National Farmers’ Union believes this will lead to labour shortages.

The WSTA says the British wine industry is experiencing an immense boost in production and sales as a result of a bumper harvest. Recent data from HMRC found that 3.9 million bottles of English and Welsh wine were released onto the market last year – a 64% increase on 2016.

Miles Beale had described 2018 as a “fantastic year for British vineyards”. Speaking to The Manufacturer, he noted that English wine growers were “ecstatic thanks to a very good spring with a nice amount of water, followed by a fantastic summer, [the] perfect for growing the grapes.”

He added: “In each of the past two years there have been over a million vines planted, possibly 1.5 million in the last year, which means that the highpoint of 6.3 million bottles of 2014 looks almost certain to be beaten this year.”

Reporting by Harry Wise