Laurent Pillet

Autumn Budget: the importance of UK spirits

Autumn Budget: the importance of UK spirits
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UK spirits are key to our economy. Take, for instance, Scotch; sold in 200 markets worldwide, it supports 40,000 jobs and is our single biggest food and drink export, with 39 bottles exported each second.

Or how about gin? The UK exported half a billion pounds of gin in 2017; a figure that could top £600 million this year, with markets including the USA, Australia, and Europe growing rapidly. The UK accounts for 67 per cent of all gin traded around the world, in what is a booming category.

At Pernod Ricard, we employ more than 2,000 Britons, exporting the likes of The Glenlivet, Chivas and Beefeater to 160 countries globally, and selling to pubs, bars, restaurants and retailers across the UK. We’re part of a broader spirits footprint; £30 billion of economic activity; 170,000 jobs; one in every seven bottles traded globally. The government should be backing this industry. Instead, it’s taxing it to the hilt.

Just under three-quarters of the price of a typical bottle of Scotch whisky and 70 per cent of the price of a bottle of gin is taken in alcohol duty and VAT. As a nation, the UK pays 37 per cent of all alcohol duties collected in the EU, with one of the highest rates anywhere in the world.

What’s more, this burden is increasing. Over the past decade, spirits taxation increased 41 per cent. On an average bottle at £14, almost £10.50 goes to the Treasury. That doesn’t leave much for the producers, retailers, or the wider supply chain that works so hard for it; literally the last few drops.

We’ve seen this year that a freeze in alcohol duties not only benefits hard-pressed consumers, it also helps an important UK industry to grow. Building a domestic market is key for brands, before they can go on to export. That’s why wine-producing economies such as France, Spain, Italy and Portugal have a zero rate of tax domestically. The same principle applies to the UK. At a time of uncertainty, a freeze in alcohol duties would help UK producers to invest, grow and export — key objectives for the government.

What’s more, it would help public finances, too. Alcohol duties were frozen in the last autumn Budget, with effect from February 2018. This resulted in a £270 million increase in tax receipts in just six months.

Whether it’s Scotch whisky or British gin, this success cannot be taken for granted. Spirits production is a resource-intensive business. Breathing new life into old distilleries and investing in state-of-the-art bottling is expensive. Just look at the £50 million bottling facility we’ll be opening in Dumbarton, or the £20 million expansion of the Glenlivet distillery.

With distilleries from the North of Scotland to Plymouth in the south-west, and Beefeater in the heart of London, ours is a truly UK footprint. And at Pernod Ricard, we’re committed to seeing UK spirits flourish — after all, they represent 40 per cent of our core, strategic global brands.

However, we’d like to see this commitment matched by the Chancellor. For this reason, we — together with our trade associations — are calling for the government to freeze duty at this autumn’s Budget, to benefit business, consumers, and public finances.

Let’s stop the super tax, and let’s back UK spirits — an export powerhouse, and an engine for future growth.

Laurent Pillet, managing director of Pernod Ricard UK