Britons are facing increased prices on their preferred alcoholic beverages starting today due to a new tax hike that coincides with the end of Dry January. Alcohol duty has gone up by 3.66%, aligning with RPI inflation rates. This adjustment 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 reported by the Wine and Spirit Trade Association (WSTA).
The decision to raise these duties was made last year as part of the Autumn Budget. Industry leaders in the wine and spirits sector have expressed concerns, stating that price increases are necessary for businesses to remain viable. Last year saw a 3.6% increase in alcohol duty, raising the cost of a bottle of wine and gin by 54p and 32p, respectively, while draught duty was reduced by 1.7%, equivalent to a penny less per pint.
Additionally, a new taxation system based on the strength of wine was introduced, leading to a £1.10 increase in duty for a bottle of 14.5% red wine since the recent alcohol duty framework was implemented in August 2023. Alcohol duties are inherently linked to beverage strength, prompting some beer brands to lower their alcohol content, such as Foster’s, Carlsberg, Coors Light, and Sol, in an effort to manage production costs.
Consumer rights expert Martyn James criticized the timing of the tax hike, coinciding with the end of Dry January, stating that it is a setback for those trying to reduce alcohol consumption. Emma McClarkin, from the British Beer and Pub Association, highlighted the potential impact on prices for consumers and businesses. Miles Beale, head of the WSTA, emphasized the added complexities for the wine and spirit sector, particularly with wine now being taxed by strength.
In response, a Treasury spokesperson defended the alcohol duty increase, citing its role in maintaining public finances and supporting essential public services. The WSTA provided figures showing the price changes before and after the alcohol duty adjustment took effect.