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by James Bailey
Published: 04 October 2024
Wine prices are set to rise as UK retailers prepare to make big changes to wine taxation from February 2025. Businesses warn the new system will require a six-figure investment to deal with the administrative burden, with potential annual costs also reaching similar amounts. .
Majestic, Laithwaites, The Wine Society and Cambridge Wine Merchants are among the retailers telling their customers that the upcoming tax regime will lead to higher prices. The changes will scrap the current fixed price of £2.67 for wines between 11.5% and 14.5%, providing up to 30 different prices depending on the strength of the alcohol. This means that customs duty on a 14.5% bottle will rise to £3.09.
The Wine and Spirits Trade Association (WSTA) and major retailers have called on the government to retain the current facilities, arguing that removing them would burden businesses and increase costs for consumers. “Companies like ours will need to invest six-figure sums just to develop the systems required to handle the new approach, with ongoing administrative costs likely to reach similar amounts on an annual basis,” Majestic and Cambridge Wine Merchants said in a joint statement. For customers.
Miles Bell, chief executive of the WSTA, commented: “This week we see a grim warning from wine retailers who are so concerned about the impact of unnecessary and costly red tape that is set to come into effect next year, that they feel it is only the right thing to do.” That their customers know that more price hikes will come in the future.
Steve Finlan, chief executive of the Wine Association, added: “If the new government is serious about listening to businesses, it must recognize an entire industry is united against the proposed new duty regime. It should be easy to extend the current easement and then engage in meaningful dialogue to find a solution that works for government, business and consumers.
Retailers are also concerned that some wine products may disappear from the UK market entirely due to the increasing complexity of exporting to Britain. “Small, family-run vineyards producing great wines are unlikely to change operations that have been in place for generations to suit just the UK market,” the joint statement warned.
John Colley, chief executive of Majestic, emphasized the wider impact: “Removing wine easements will disproportionately impact small businesses – including the 900 independent wine merchants operating across the UK. This will restrict growth and threaten livelihoods at a time when We must do everything we can to support our high streets.
Alcohol sales in the UK have already fallen following a record rise in taxes last year, cutting Treasury revenues by £1.3bn. Industry leaders say maintaining the current system would support business growth and stability at no cost to the government.
With less than four months before the policy changes come into effect, the industry is urging the government to reconsider its position in the upcoming Budget on October 30, highlighting that failure to act could damage the UK's position as one of the world's largest wine importers.
