Distillers and bar owners call on chancellor to cut alcohol duty

By Andrew Catchpole

Published: 05 February, 2024

A group of award-winning small distillers have penned an open letter to Jeremy Hunt calling for a cut to alcohol duty in the Spring Budget.

Supported by numerous bars and pubs, the 10 distillers – representing a wide geographical spread of the UK's SME distilleries – argue that the current record level of duty is unsustainable for the trade.

In support, they cite the recently published Spring Budget dossier by The UK Spirits Alliance (UKSA), which highlights how these record levels of duty ‘are hitting consumers and damaging businesses’ across the organisation’s 280-strong membership and beyond.

Read more: WSTA calls on Chancellor to cut duty in spring budget

Tax on spirits stands at 80%, the highest in the G7 Group of advanced economies, with still wine also suffering all-time highs after a duty rise of 20% in August 2023.

The group criticised the government’s Brexit Pubs Guarantee, which has provided relief to beer and cider drinkers, saying that spirits face a ‘disproportionately higher tax burden’ than other categories, which is damaging to hospitality businesses and driving up inflation.

A November 2023 survey of pub landlords by the group found that 92% were supportive of a freeze or cut to alcohol duty to help support hospitality businesses faced with a tough economic climate.

“British drinkers have embraced locally made gin and whisky, and I’m proud of what we have achieved,” said signatory Chris Jaume, of Cooper King Distillery in York.

“It’s been a difficult few years, grappling with Covid, spiralling costs and a cost of living crisis, and we’ve now been hit hard by the duty rise that came into effect on 1 August. It’s driving up the price of our spirits, harming the valued hospitality venues we supply, and is effectively an unfair tax on consumers who want to support their local distillery.

“If duty continues to rise, we’ll see demand and production drop, and our green investments stall. I’m just one of hundreds of distillers across the country who are worried for their future. The chancellor must cut duty on spirits in the Spring Budget and support our sector.”

Writing in support, Andrew Lamont, owner of No. 29 Bar in Richmond, Yorkshire, added: “As the owner of a bar, I feel it critical to support the growth of the spirits industry in the UK… Policies and tax must reflect and support modern-day drinking, entrepreneurship, and growth.

“Freezing duty on spirits plays a big part in supporting our industry, easing pressure on hospitality amid a time of price rises and increasing business costs. To support hospitality, the chancellor and the Prime Minister must get behind supporting spirits. In the Spring Budget, alongside distilleries, we urge the chancellor to back a cut to duty.”

The full letter to the chancellor:

Dear Mr Hunt,

We write to you as business owners with growing concerns for our business ahead of the Spring Budget and ask for your support. We greatly appreciated the duty freeze until August that was announced at the Autumn Statement, and whilst this has been welcomed by industry, we’d like to see a cut to spirits duty this March to demonstrate your continued support for the spirits sector.

Economic research suggests the spirits industry supports over 446,000 jobs and contributes £13 billion to the UK economy.

The significant investment into the industry has paid dividends from the boom in distillery numbers, which have grown from 190 to 930 in the past eight years alone. However, despite the industry’s growth in recent years, we are extremely worried by the current rate of duty which remains at an unsustainable level.

The implementation of the reformed alcohol duty system in August 2023, left distillers facing the highest tax increase on spirits in over 40 years.

Whilst duty has been frozen until August 2024, the current levels remain unsustainable. The extremely high level of duty is yet another cost heaped on producers amid a very cost-heavy environment, with tax on a bottle of spirits already at 80% - the highest in the G7. The operating environment remains challenging for our sector, with inflation and the cost of living adding further pressure as consumers rein in their spending.

A cut in the level of duty would provide much needed relief to our businesses and consumers who continue to see their budgets squeezed. Without it there is a risk that our iconic spirits products could soon become an unaffordable luxury for the many responsible consumers who enjoy them.

Britain’s hospitality sector is currently in crisis, as pubs and bars across the UK close daily due to rising cost pressures. Given that one third of all drinks served in hospitality settings are spirits, we know first-hand that the duty burden, for them too, is too much to bear.

We are therefore requesting that you strongly consider our ever-growing concerns as we approach the Spring Budget and cut sprits duty. We would very much appreciate your help in ensuring we are given a fair opportunity to thrive.

With very best wishes,

Hugh Anderson

Downton Distillery

Alex and Drew Griffiths

Griffiths Brothers Distillery

Kate Marston

Puddingstone Distillery

Michael Yeoman

Spirit of the Downs Distillery

Chris Jaume

Cooper King Distillery

Annica O’Nions