Britons are facing higher prices for their preferred alcoholic beverages starting today due to an increase in alcohol duty following the end of Dry January. Alcohol duty has gone up by 3.66%, in line with the Retail Price Index (RPI) inflation rate. This hike translates to an additional 11p on a bottle of Prosecco with 11% alcohol by volume (ABV), 14p on a bottle of red wine with 14.5% ABV, and 38p on a bottle of gin with 37.5% ABV, as reported by the Wine and Spirit Trade Association (WSTA).
The decision to raise alcohol duty was made last year during the Autumn Budget. Wine and spirits industry leaders have expressed concerns, stating that businesses have no option but to raise prices to remain viable. Last year, drinkers faced a 3.6% increase in alcohol duty, resulting in 54p added to a bottle of wine and 32p to a bottle of gin, while draught duty saw a 1.7% reduction, equivalent to a penny off a pint.
A new taxation system was introduced concurrently, where wine is taxed based on its strength. WSTA highlighted that the tax on a bottle of 14.5% red wine has escalated by £1.10 since the recent alcohol duty regime was implemented in August 2023. Alcohol duties are influenced by the potency of beverages, prompting several beer brands to lower their alcohol content in recent months to cut costs.
Consumer rights expert Martyn James criticized the timing of the alcohol duty increase, coinciding with the conclusion of Dry January. He emphasized the impact on individuals striving to moderate their alcohol consumption, calling it an unwelcome development. Emma McClarkin, the British Beer and Pub Association’s chief executive, expressed concerns about potential price hikes due to the duty increase, which could strain brewers and publicans.
Miles Beale, CEO of WSTA, highlighted the complexity of price adjustments, particularly for wine now taxed by strength, foreseeing challenges ahead for the wine and spirit sector. He mentioned additional financial burdens, such as national insurance contributions and business rates, which compel businesses to raise prices to survive. A Treasury spokesperson defended the alcohol duty increase, citing its role in maintaining fair public finances and funding essential services.
The WSTA provided a comparison showing the prices before and after the alcohol duty increase for various drinks. This change signifies a significant financial impact on consumers and the industry, with businesses navigating challenges in the face of escalating costs.