Without getting too political, it’s safe to say that the current government here in the UK is certainly not in favour of those in the hospitality industry, and that’s putting It mildly.
As a result of the pandemic, and various other factors since 2020, it became somewhat of a tradition for the government’s Budget to announce a freeze in alcohol duty in an effort to “manage” the UK economy and provide reassurance to pubs, breweries, bars, restaurants, and distilleries. We all knew these measures would only be temporary however, and sure enough, in the Spring Budget of 2023, the government announced that Alcohol Duty Tax in the UK would increase in August 2023.
Well, August 2023 is here, and that alcohol duty rise kicked in, and is expected to hugely impact those in the whisky industry. How? Well, we don’t know for certain, but we can look at the facts.
Make no mistake about it, the Scotch Whisky Association is not happy, and their response to the Alcohol Duty tax couldn’t be clearer. They have said that the UK government has broken their pledge to “review alcohol duty to ensure our tax system is supporting Scottish whisky.”
In the largest increase in Alcohol Duty in decades, it’s safe to say that the government is hardly living up to their pledge, though this is hardly the first time that the current government has gone back on their word.
What is Included in the Alcohol Duty Tax and what this means
Covering beer, wine, cider, and spirits (excluding draught products in on-trade venues such as bars and pubs) the increases (and decrease) in price for alcoholic beverages will be as follows:
- A 5% ABV pint of draught cider will be 2p higher
- A 5% ABV 500ml bottle of non-draught cider will be 5p higher
- A 5.4% 250ml can of a ready-to-drink spirits based drink will be 6p lower
- An 11% ABV 250ml glass of still wine will be 5p higher
- A 40% ABV 25ml serving of whisky will be 3p higher
As 99% of whisky is sold from the bottle, the relief on draught products will barely benefit the whisky industry at all.
So, what will this mean for the whisky industry? Well, it’s yet another blow to an industry that is already struggling, and has been since 2020.
Of course, this controversial Alcohol Duty Tax will almost certainly have to be passed on to consumers. That is not good news.
With the UK crippled by record breaking inflation, insanely high energy prices, rising fuel prices, rising interest rates (as this article is being put together the Bank of England has just hiked interest rates for the 14th time, the highest they’ve been in 15 years), grain shortages, and countless other issues, people are being squeezed dry, resources are running thin, and people simply don’t have as much disposable income as they did years ago.
Put simply, consumers may struggle to afford their favourite drams, or at least, as much. Even if they can, some are going to resent paying more when everything is getting more expensive. People enjoy their favourite wee dram. It’s a great tipple to enjoy after a long and stressful week in the UK (believe us, we’ve had plenty) yet they may be forced to cut back on this indulgence, or find a cheaper brand.
It is perhaps, the independent bottlers and new distilleries who are going to struggle the most. To some, an increase of a few pence may sound like nothing, but take it from us, those pennies add up very quickly and it means that bottlers and distilleries either have to pass on these new expenses to their customers, or reduce their already tight profit margins even further. Just to put this into context, from an average priced bottle of Scotch whisky, 75% of that bottle will be taxed.
Make no mistake about it, the industry will survive, but this is a historic blow to the Scotch Whisky Industry. It is also a decision that will have more eyes on the General Election in 2024 than ever before.
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