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Liberty adds to calls on government to reconsider wine duty reforms

Published:  17 December, 2021

Liberty Wines has joined a growing roster of UK drinks companies in voicing its concerns around the upcoming government alcohol duty review, which is under consultation until 30 January 2022.

In a detailed statement, the company argues that the reforms, proposing a direct linking of duty on wine to ABV, “have the potential to undermine the success of the UK’s quality-led wine industry, its leading role in the global wine trade and, ultimately, the duty receipts it generates”.

Contrasting origin-reflective 14.5% ABV Barolo and 9% Mosel Riesling with other drinks categories and “commodity wines”, which can be ‘reformulated’ to a lower ABV, the company highlights the danger to the diversity of the quality-led market if higher ABV wines attract more duty.

“[T]he success of the UK’s quality-led wine sector is dependent upon a market and a duty regime that supports sales of a diverse range of wines that reflect their place of origin,” the statement says.

“Furthermore, the diversity of high-quality wines sold gradually transfers to the commodity wine market, enabling the industry to remain relevant and resilient as consumer preferences change. This dynamism and diversity has made the UK’s quality-led wine industry a global hub.”

Speaking to Harpers, Liberty’s director of insights and business development, Alex Linsley, adds that while Liberty welcomes the removal of higher duty rates on sparkling wines, the proposed reforms to duty will add an overall 5% cost to the price of a bottle of wine, equalling a £2 million hike across Liberty’s annual sales alone.

In the statement Linsley also highlights the disparity in the proposed new duty regime between wine and rival spirits and beers, arguing that this goes against government’s stated intention of a fairer and simpler duty system.

“These reforms effectively represent a duty increase for wine while little changes for beer and spirits. Current and proposed duty rates are the same for wine at an ABV of 11.5% – but the average ABV of still wine in UK supermarkets is 13%. We expect still wine duty to rise across our business by an average of 18p a bottle (+8%) and wine duty overall to rise 5% (accounting for the removal of the sparkling wine duty premium). This contradicts the government’s pledge not to significantly adjust the amount of revenue raised and their stated intention of implementing a fair system across all alcoholic drinks.”

In line with the Wine & Spirit Trade Association and others in the trade, Liberty calls on the government to “honour its stated intention” to not increase revenues raised from wine duty, recommending:

“Levy duty at a single rate for a given volume of still or sparkling wine, regardless of ABV, and a separate single rate for a given volume of fortified wine, regardless of ABV. The definitions of wine and fortified wine should continue to correspond with international standards (8.5%-15% ABV and 15%-22% ABV respectively). In charging a fixed level of duty for all still/sparkling wine and a separate fixed level for all fortified wines, sales of wines of diverse origins and styles can continue to thrive in the UK. This will protect the dynamism, economic contribution and global reach of the UK wine market while giving government a simple and robust means to continue to levy duty on these wine sales.”

Linsley added: “We want to make our position on this very clear because of the significance of the effects we think this is going to have on cost and quality. This is not a Liberty issue - this affects the whole wine trade and all of its customers, so we are very keen to work alongside others. These are significant changes that will affect businesses that are already facing a very challenging market, to say the least.”