A Duty to Drink!
In Italy and Spain, it’s zero, in France, it’s 3p.
In the UK on Friday 31 January duty was £2.67.
Duty is paid on a bottle of wine that has between 11.5 % and 14.5% ABV (Alcohol by volume)
However, on Saturday 1 February, there was a major change in the way it’s calculated.
The Higher the alcohol the Higher the rate.
In 2023, the Government introduced a new principle – the higher the alcohol, the higher the rate. The change aimed to “simplify the system, and to align it more closely with public health goals.”
It was recognised that the trade would need time to adapt to the new system so an ‘Easement Period’ of 18 months was introduced. That period is now over.
Instead of one duty rate, there is now a different rate for each 0.1 % of alcohol; one rate becomes thirty (some simplification!). Of course, to be fair, very few producers set levels other than to the nearest 0.5% but that’s still six different rates as opposed to one.
The rates will vary from £2.54 (for 11.5%) to £3.21 (14.5%). That’s an increase of 54p at the top end.
For the producer, the cost will be higher duty (plus VAT on the duty, of course) plus the extra cost of administering a ‘simplified’ system. That’s a commercial incentive to reduce the strength of their products.
However, the ABV (and therefore duty) can vary from vintage to vintage – how will producers and retailers allow for that?
Prices will rise
For the consumer, the result will be a higher than inflation rise in the cost of an average bottle; the price of a 14.5% Australian red is expected to rise by 80p.
Wines with an ABV below 12.5%, such as sparkling and English, will benefit from a slight decrease, up to 13p.
The advice to UK customers has always been ‘trade up’: the more you pay, the higher the proportion of the cost is wine and the lower the proportion is duty and VAT. That’s truer than ever.
You can always console yourself by drinking Champagne; toast the reduction in the duty on sparkling wine, knowing that someone, somewhere (but almost certainly not you) has just saved a vast amount on the cost of what’s in the glass … 0.3p.
John Freeland
Kibworth & Smeeton WI
