Wine clubs find alcohol duty increase hard to swallow

WINE club membership fees will soar because of tax rises if Rishi Sunak presses ahead with post-brexit reforms to alcohol duty, industry leaders warned yesterday.

Major wine subscription firms said they would have to pass on the increased cost to consumers and urged the Chancellor to reconsider his plans.

Wine will be taxed on its alcoholic strength, rather than by volume, from Feb 1 next year, in reforms made possible by the UK’S decision to leave the EU.

Virgin Wines UK said the price of some subscriptions would rise by as much as £15.20 a year as duties would increase on almost all wines. Their Discovery Club cases will go up, on average, by £3.80 per case of 12 bottles.

Duty will increase on 70 per cent of all wine and sparkling wine, 80 per cent of all still wine, 95 per cent of all red wine and all fortified wines.

Jay Wright, chief executive of Virgin Wines, said: “No business will be able to absorb these significant duty increases and as such the UK consumer will once again be left to bear the heavy burden of this substantial tax rise.”

Philippa Strub, managing director of Laithwaites, which has 200,000 wine club members, said: “The Government’s proposals will [lead] to higher prices for wine drinkers in the UK.

“The new duty system alone could increase the price of a 12-bottle case of wine by 5 per cent, notwithstanding other global inflationary pressures.”

The Government argues the current system incentivises producers to make stronger drinks because all wines and ciders face the same flat rate.

The three bands of taxation will be replaced with 27 different rates based on 0.5 per cent increments of alcohol by volume.

The Wine and Spirit Trade Association said additional staff would be needed to deal with the new red tape, which will affect vineyards, retail, bottling plants, and small and mediumsized enterprises.

A Treasury spokesman said: “Our reforms will replace our outdated rules with a commonsense approach that puts the taxation of stronger beers, wines and spirits on an equal footing, making lighter and sparkling wines more affordable for UK drinkers.

“This comes on top of freezes to alcohol duty at the last three budgets, saving consumers £5.7billion in total.”

Sparkling wine will benefit from a tax reduction of 25 per cent to the level of still wines, which will mean a typical bottle of prosecco is 87p cheaper.