Britons are facing increased prices for their beloved alcoholic beverages starting today due to a recent tax hike following the end of Dry January. Alcohol duty has gone up by 3.66%, mirroring RPI inflation rates. This translates to an extra 11p for a bottle of Prosecco with 11% ABV, 14p for a bottle of red wine with 14.5% ABV, and 38p for a bottle of gin with 37.5% ABV, according to the Wine and Spirit Trade Association (WSTA).
The decision to raise the duty was made last year during the Autumn Budget. The alcohol industry leaders emphasize that price increases are necessary for businesses to survive under these circumstances.
In the previous year, alcohol duty saw a 3.6% increase, causing a 54p rise in wine prices and a 32p increase for gin, while draught duty was reduced by 1.7%, equivalent to a penny less for a pint.
Additionally, a new tax system based on the strength of the wine was introduced recently. WSTA reports that the tax on a 14.5% red wine bottle has surged by £1.10 since the new alcohol duty structure was implemented in August 2023.
Alcohol duties are partially dependent on the alcohol content of drinks. Some beer brands have lowered their alcohol content in recent months to cut costs, including Foster’s, Carlsberg, Coors Light, and Sol.
Emma McClarkin, the British Beer and Pub Association’s chief executive, expressed concerns over potential further price raises due to these changes, highlighting the strain on brewers’ profit margins. Miles Beale, WSTA’s chief executive, noted the increasing complexities in price adjustments, especially for wine taxed by strength, leading to more challenges for businesses.
The Treasury defended the alcohol duty increase, stating its importance in maintaining public finances for essential services. WSTA provided figures showing the price differences before and after the alcohol duty increase for various drinks.