Britons are set to see an increase in prices for their preferred alcoholic beverages starting today due to a new tax hike following the conclusion of Dry January. Alcohol duty has been raised by 3.66%, aligning with RPI inflation. This adjustment translates to an additional 11p on a bottle of Prosecco with 11% ABV, 14p on a bottle of red wine with 14.5% ABV, and 38p on a bottle of gin with 37.5% ABV, as reported by the Wine and Spirit Trade Association (WSTA).
The decision to raise the duty was finalized last year during the Autumn Budget. Industry leaders in the wine and spirits sector have expressed concerns that businesses will need to raise prices to remain viable. Notably, drinkers experienced a 3.6% increase in alcohol duty last year, resulting in a 54p rise in wine prices and a 32p increase for gin, while draught duty saw a reduction of 1.7%.
In addition, a new taxation system was implemented where wine is taxed based on its strength. WSTA indicated that the tax on a bottle of 14.5% red wine has surged by £1.10 since the recent alcohol duty framework was introduced in August 2023. Alcohol duties are influenced by drink potency, prompting some beer brands to lower their alcohol content to manage costs.
Emma McClarkin, the chief executive of the British Beer and Pub Association, expressed concerns about potential price hikes resulting from these changes. Miles Beale, chief executive of WSTA, highlighted the complexities of price adjustments, particularly for wine taxed by strength, which will bring more administrative challenges for businesses already facing various expenses.
The Treasury defended the alcohol duty increase, stating its importance in maintaining robust public finances that support essential services. The WSTA provided figures showing the prices before and after the alcohol duty rise for different alcoholic beverages.