Britons are being cautioned that the cost of their preferred alcoholic beverages will increase starting today due to a new tax hike that coincides with the conclusion of Dry January.
Alcohol duty has surged by 3.66%, aligning with RPI inflation. This surge 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 per the Wine and Spirit Trade Association (WSTA).
The decision to raise duties was finalized last year during the Autumn Budget. Industry leaders in the wine and spirits sector have cautioned that businesses are compelled to raise prices to survive.
In the previous year, consumers faced a 3.6% increase in alcohol duty, resulting in an additional 54p on a bottle of wine and 32p on gin, while draught duty saw a 1.7% reduction, equivalent to a penny off a pint.
Simultaneously, a new taxation system was introduced, where wine is taxed based on its strength. WSTA reported 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 somewhat influenced by the strength of beverages. Several beer brands, such as Foster’s, Carlsberg, Coors Light, and Sol, have decreased their alcohol content in recent months to lower costs.
Emma McClarkin, the chief executive of the British Beer and Pub Association, expressed concerns about potential price hikes resulting from these changes, emphasizing the strain on brewers’ profit margins and the risk to the UK’s renowned brewing industry.
Miles Beale, the chief executive of WSTA, highlighted the complexities of price adjustments, particularly for wine taxed by strength, indicating additional administrative burdens for businesses.
A Treasury spokesperson defended the rise in alcohol duty, stating its significance in maintaining robust public finances that support essential public services.
The following figures, supplied by WSTA, illustrate the prices before and after the alcohol duty increase for various drinks.