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Duty amends will “wipe out the benefits” of non-EU trade deals – make your voice heard

Published:  21 January, 2022

Accolade Wines is the latest major wine company to join calls urging the government to take stock of its alcohol duty review. 

In conversation with Harpers this week, Caroline Thompson-Hill, MD for Europe at Accolade Wines, spoke of her delight to see the “extensive progress” made on the Free Trade Agreements (FTAs) between the UK and Australia / New Zealand governments. Australia is home to Hardys – Accolade’s flagship and the number one Australian wine brand in the UK.

However, she expressed fear that the proposed alcohol duty reforms will “wipe out the benefits” of these recent agreements, as they look set to overcomplicate the current system – and actually increase the tax burden for wine – in contradiction with the government’s stated aims.

“We are concerned that the current proposed excise duty reforms from the UK government will have long-term and far-reaching implications for the wine industry and wine drinkers,” Thompson-Hill said. “While the reforms are intended to be revenue neutral, wine sold in the UK will be subject to much higher tax rates.

“Export data from Wine Australia suggests the current proposal would add £81 million in duty annually to Australian wine sold in the UK.

“This will impact businesses and the on-trade sector with additional cost and red tape for them to administer in a time when these businesses are dealing with Covid, staff shortages, rising prices, and supply chain disruptions.”

This week, Harpers is shining a light on the potential impact of the proposed duty changes as we rapidly approach the 30 January consultation deadline.

Accolade’s comments add to the calls of others, including Liberty Wines, industry representatives such as trade body WSTA and Wine Drinkers UK, and vocal campaigning merchants such as Hal Wilson of Cambridge Wine Merchants and Daniel Lambert of Daniel Lambert Wines.

All are urging colleagues across the UK wine trade to add their voices and views via the consultation form provided by government for feedback.

The trade’s core issues with the proposed new duty system are that it will massively complicate the tax regime.

Under the new system, wine will be separated for tax purposes into 27 tiers according to abv, as opposed to the current three tiers (for Sparkling wine, still wine up to 15% abv and fortifieds above 15%), while hitting wine with an additional tax burden above and beyond that for sprits, beers and ciders.

Critics say these plans contradict the government’s commitment that the review of the duty system is not intended to materially affect the amount of duty collected.

“The natural-occurring, median alcohol by volume (ABV) rate of wine in the UK market is approximately 13%,” Thompson-Hill added. “However, the current reforms suggest 11.5% as the median point, therefore imposing a significant increase in tax on all products with an ABV of 11.5% or higher. This means that most wine will be taxed at a significantly higher rate. 

“There’s no doubt that this proposal will impact and likely reduce the range of wines available to British consumers not only from Australia, but also New Zealand, Chile, South Africa, Argentina, and the US.

“We recognise the need for a reformulation of the current system to promote fairness and simplification, and we believe there is a workable solution that delivers the UK government’s objectives, particularly by continuing to encourage reformulation and innovation in lower strength wine, while still supporting choice in traditional strength product.”