Written by: Elliot Keck, Head of Campaigns
It's offline English Wine Week. This made me think of a wine bar located in the Cedovita neighborhood of Porto. It's an unassuming place, set at a crossroads, with tables and chairs extending under a simple but elegant façade of large windows and sharp, jagged cornices, a most characterful affair, at least for a Brit on a limited budget. It's a list of about 30 different types of Portuguese table wines for €3 a glass (and a generously sized glass at that).
Now, none of these wines were particularly special, although after sampling a few of them, I found them all to be enjoyable drinkable. What was notable was the price. Three euros cost around £2.50, compared to the average price in England of over £5, for what is likely to be a cheap, mass-produced item. Anything local, from England, will cost much more. Why the disparity? Well, there is an obvious answer: the average wage in Portugal is much lower than in the UK. Nearly 60 per cent of what it is in the UK.
But then why is wine so much cheaper in France and Germany, where salaries are the same or higher? The answer is simple: tax. In most parts of Europe, wine is not taxed at all. Spain, Portugal, Italy and Germany do not impose an excise tax on wine, and are joined by a group of other Central and Eastern European countries. In France, it is so small that it is barely registerable – just 3 cents a standard bottle. Compare this to £2.67 for a standard strength bottlethe current rate in the United Kingdom.
But it's not just the UK tax rate, although it is shockingly high. These are “very expensive and complex new tax rules” that will come into effect in February 2025, As Miles Bell explained, CEO of the Wine and Spirits Trade Association. These rules place a burden not only on wine producers, but also on consumers, who will inevitably bear the brunt of the increased costs. Previously, wine was taxed depending on the quantity of wine (i.e. at a rate of £2.23 for all 750ml bottles of table wine, with separate rates for fortified and low-alcohol wines). Now, the tax is levied based on the amount of pure alcohol in a bottle of wine, at different rates based on strength.
This makes sense on paper – treating the tax rate as measured by the amount of alcohol brings the system in line with that of other alcoholic beverages. But in effect, it increases the number of tax bands for regular strong wine (11.5 per cent to 14.5 per cent, representing 85 per cent of wine sold in the UK) from one to 30, depending on which the tax paid will vary. Strength, in increments of 0.1 percent at a time. There are more wine ranges that do not fall within the 11.5 to 14.5 percent range.
Most importantly, wine is not like other alcoholic products. As an agricultural product, the strength of wine can vary, sometimes dramatically, from year to year. This variation is important, especially since wine is often sold by year or vintage. Furthermore, the strength of a wine printed on the label is often only an estimate and is reasonably approximate. There is a margin of +/- 1 percent for almost all winesWhich means a 12 percent wine could be between 11 and 13 percent, or twenty different tax bands. The government itself has realized the extent of the problem. Until February 2025, all natural strength wines are treated as if they were 12.5 percent ABV. But after realizing this problem, they set a deadline for a solution. One wine merchant claimed the new rules would require the alcohol content of 90 per cent of the bottles he bought to be checked and recorded – a seven-fold increase in the workload on staff. The impact on prices will be significant.
Aside from the complexity of taxing wine, there is a separate reason why most of Europe does not tax the product. Wine is one of their most important and proudest cultural contributions. Whether it's pinot noir from Burgundy, Barolo from Piedmont, port from Portugal, or riesling from Germany, taxing such hallowed industries would be seen as almost unpatriotic. Since England did not historically produce wine, even though we always consumed a lot of it, there was no local industry to support it in this way. On the other hand, despite the centralized nature of beer and pubs, we still have… One of the highest beer duty rates in Europe.
But whether we are historically known for producing wine or not, In the past decade, it has been dethroned. We now have 943 vineyards and 209 wineries in the UK, and wine production has increased from 5.3 million bottles in 2017 to 12.2 million bottles in 2022 despite the impact of the pandemic. It is award-winning, with British wines being included in our 'Best in Show' list of the top 50 wines. For decanter prizes for five consecutive years and has showcased British wines 186 times across all categories, including companies such as Chapel Down, Camel Valley Vineyard, Gosbourne and Ridgeview. Previous winners are Nyetimber.
It's time to talk about the UK wine industry. This dynamic and diverse industry is stifled by an overly complex tax and regulatory system with rates much higher than most countries in Europe. The new tax rules, scheduled to be implemented in February 2025, could increase prices for consumers and reduce competitiveness in the global market. If you see any politicians celebrating English Wine Week, which runs until Sunday (23), remember to ask them: Do you want to help or stifle this industry?
