The bubble is set to burst for British fans of sparkling wine and Champagne as the triple whammy impact of Brexit, inflation and alcohol duty looks likely to cause a hike in prices.
Duty on a bottle of still wine in the UK is an eye-popping £2.08, meaning that 55 per cent of the average-priced bottle goes on duty and VAT. But for fans of sparkling wine duty is even more – 28 per cent higher than still.
This Valentine’s Day UK couples sharing a bottle of sparkling wine or Champagne will pay an astonishing £2.67 in duty compared to a couple in France who will fork out just less than 6p on duty.
The French pay just 3p duty on a bottle of still wine compared to the £2.08 paid by the Brits.
The average drinker in the UK pays around £206 in alcohol duty per year. If Britain enjoyed the same duty rates as France this could drop dramatically to £52.
The UK alcohol industry is one of the most heavily taxed in Europe with UK wine drinkers paying 68.4 per cent of all wine duties collected by all 28 EU member states, despite accounting for only 11 per cent of the population.
With higher inflation, the impact of the pound’s devaluation and the potential for duty increases, the wine industry faces a potential triple whammy that will be devastating for the trade in 2017.
The WSTA has crunched the numbers and our predictions show that an average-priced bottle of still wine sold in the UK could go up by ten per cent, equating to an additional 53p per bottle.
The average-priced bottle of sparkling wine is likely to go up nine per cent – adding 59p to your fizz and Champagne looks set to see a five per cent rise adding £1 to the cost of a bottle.
Miles Beale, Chief Executive of the Wine and Spirit Trade Association, said: “We hope that Government doesn’t burst the bubble for couples enjoying a romantic drink on Valentine’s Day by adding further costs to their bottle of bubbles with wine duty increases. With Brexit costing 29p per bottle and rising inflation indicated by the Bank of England last week adding a further 17p, further duty rises could make it a triple whammy for consumers who are already paying a staggering amount of wine and spirit duty.
There is now less than a month to go before the Chancellor unveils his Budget – we are urging Philip Hammond to recognise the monumental challenge facing an industry that supports 270,000 jobs and contributes £19.9bn to the economy by making a two per cent duty cut.”
Wine was the only product singled out for inflationary rises in the UK’s 2016 Budget and the year before in 2015 it was the only product not to receive a two per cent cut. Worse still, duty is 30 per cent higher on sparkling than still, which means lovers’ sparkles are hardest hit – including the majority of our increasingly well regarded home grown English wine.
Last month the WSTA published new economic modelling which showed that a two per cent cut would boost the wine and spirits industry economic contribution by £2.9bn and also increase Treasury revenues by £368m.
One in five bottles of champagne sold in the world comes to the UK. France is the UK’s largest wine trading partner by value and in 2015 traded £1bn worth of wine.
Demand for sparkling wine in the UK currently remains high, but businesses are concerned that price hikes could see consumers fall out of love with bubbles.
The latest figures show that in 2016 Brits bought over 131m bottles of bubbles from our shops and supermarkets up +13 per cent on last year. This does not include sales in restaurants and bars.
The WSTA asked YouGov to find out what the British public felt about the level of duty paid on wine.
The poll revealed that 60 per cent of people underestimated the amount of tax they pay on wine.
Once they found out the tax levels 62 per cent of people think that tax is too high and just 21 per cent thought it was about the right amount.