The German historian Johann Wilhelm von Archenholz wrote about British tastes in alcohol in the eighteenth century: ‘In London they liked everything that is powerful and heady.’ Not much has changed since then. Blame it on the weather, blame it on the food or blame it on the good times, the British have always liked their drink strong.
But for how much longer will we be able to cheerfully knock back the Malbec when a new duty system is implemented in February? Wines between 11.5 per cent and 14.5 per cent ABV will have their own bands per 0.1 increment of alcohol. Which means the tax on your favourite 14.5 per cent Argie Malbec will go up from £2.67 to £3.10. Before last year’s budget it would have been £2.23. Plus there’s VAT on top of that. Yes, you have to pay tax on your tax.
The strange thing about all this extra regulation is that it doesn’t seem to have any point
John Colley, CEO of Majestic, has warned this week: ‘There is a risk that producers will stop exporting wine to the UK entirely, due to the immense administrative burden’. He continued: ‘smaller family-run vineyards, which we value so much, may not want to change processes that have been in place for generations, when they could easily export their wines elsewhere in the world without any additional costs and red tape. Basically your favourite wines could increase in price, or at worst disappear from shelves altogether next year’. You have been warned.
Before we throw up our hands and blame the puritan nanny staters in the Labour government, I should point out that this new duty regime was put in place by the puritan nanny staters in the previous administration. Port duty has already gone up by £2 a bottle but thanks to industry lobbying wines the new system was delayed on wines below 15 per cent.
When it was announced last year this revised system was billed as a simplification of our Byzantine alcohol duty laws, bringing wine into line with spirits. These are taxed at £31.64 per litre of pure alcohol. So the taxman will take £8.86 from a 70cl 40 per cent bottle of gin and £10.19 from one at 46 per cent. Plus VAT of course!
The problem is that there are many, many more different types of wine out there with varying alcoholic content. Think of the difference between the spirits aisle in Tesco and the wine aisle. But that’s not all, as Tom Ashworth from West Country wine merchant Yapp Bros. explained: ‘don’t forget that due to vintage variation, the alcohol of most wines will move around this tariff matrix annually.’ In a hot year your favourite Malbec might be 14.5 per cent ABV but in a cooler one 13.5 per cent meaning a duty rate of £3.10 as opposed to £2.88. All this needs to be checked with each new shipment of wine. Fine for Tesco which probably has a department devoted to such things but for a small business importing interesting wines from the South of France, it’s a headache.
Ashworth continued: ‘At a time when we should be reducing red tape (as various governments have promised), the end of the duty easement in February will, with one fell swoop, add 30 new tariffs in place of one. You’d have to laugh if it wasn’t so serious for the wine industry. It will add considerable administrative cost to all wine merchants (disproportionately to smaller ones) and will increase prices and reduce choice for the consumer.’
When the new regime was announced last year, Sunak described it as an incentive for ‘small craft spirit and wine producers to innovate lower-strength products.’ Already in response we’ve seen progressively weedier wines arriving on supermarket shelves which the Daily Telegraph is dubbing ‘Rishi wines’ – a phrase that I promise nobody is using in the real world. Nine per cent might be fine for a German riesling, but an Australian Shiraz at that level is not going to cut the mustard. Worse still are the so-called ‘session wines’ at 3.5 per cent.
The strange thing about all this extra regulation is that it doesn’t seem to have any point. The presenter of ITV’s The Wine Show Joe Fattorini has commented: ‘The Treasury’s own figures for the last year reveal that putting alcohol duty up means the tax take from alcohol duty goes down. By £1.3 billion.’ He added ‘so many governments are getting slapped on the arse by the Laffer Curve, it’s starting to look like the policy of the fiscally deviant.’ Saucy.
An alliance of the Wine and Spirits Trade Association and various wine retailers is trying to get the new rules amended, but I can’t see much hope. Already The Wine Society is warning that prices are going to go up significantly. My advice would be to stock up with a suitably strong Malbec while you can.
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