British gin industry call for freeze at next Budget
Source: Food & Drink International, by Dominic Cuthbert, 15 October 2018
Britain’s £2 billion gin industry shows no signs of slowing down and now gin makers across the county have united to call on the Chancellor to freeze spirit duty.
The Wine and Spirit Trade Association has teamed up with 24 of the UK’s top distillers to write to Philip Hammond, raising 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 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.
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 SMEs 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.