Britons are facing higher prices for their preferred alcoholic beverages starting today, following a recent tax increase that coincides with the end of Dry January.
The alcohol duty has gone up by 3.66%, aligning with RPI inflation rates. This adjustment translates to an additional 11p for a bottle of Prosecco with 11% alcohol by volume (ABV), 14p for a bottle of red wine with 14.5% ABV, and 38p for a bottle of gin with 37.5% ABV, as reported by the Wine and Spirit Trade Association (WSTA).
The decision to raise duties was made last year during the Autumn Budget. Industry leaders in the wine and spirits sectors have expressed concerns, stating that price hikes are necessary for businesses to survive.
In the previous year, consumers saw a 3.6% increase in alcohol duty, adding 54p to wine and 32p to gin per bottle, while draught duty decreased by 1.7%, equivalent to a penny off a pint.
Additionally, a new taxation system was introduced where wine is taxed based on its strength. WSTA highlighted that the tax on a bottle of 14.5% red wine has risen by £1.10 since the recent alcohol duty changes in August 2023.
Alcohol duties are partially tied to beverage strength, leading some beer brands like Foster’s, Carlsberg, Coors Light, and Sol to lower their alcohol content to cut costs.
Consumer rights expert Martyn James lamented the timing of the duty increase, noting the irony of it coinciding with the end of Dry January. He criticized the government’s decision, stating it detracts from the celebratory spirit of the occasion.
Emma McClarkin, chief executive of the British Beer and Pub Association, expressed concerns over potential price increases due to the recent changes, emphasizing the strain on profit margins for brewers. Miles Beale, chief executive of WSTA, highlighted the complexities of price adjustments, particularly for wine taxed by strength, which could lead to more operational challenges for businesses.
A Treasury spokesperson defended the tax increase, stating that alcohol duty plays a vital role in maintaining public finances to support essential services.
The WSTA provided pre-tax increase prices for comparison with the new costs as of today.