The Wine and Spirit Trade Association (WSTA) is urging the Chancellor to give UK pubs a much needed boost by cutting wine and spirits duty by 2%.
It claims that the Government previously focusing only on beer tax cuts to support pubs is a job half done as Brits are broadening their horizons when it comes to their favourite pub tipple and buying more wine and spirits at the bar than ever before.
Wine and spirit sales in UK pubs now accounts for over one third of the takings, worth £5.7billion last year, providing vital cash flow to the pub industry.
New research by the WSTA show that 36% of the value of alcohol sold in pubs is now wines and spirits and that a 2% duty cut would provide a boost worth £31m to the industry, the equivalent of up to £594 for every landlord compared to an inflationary rise.
The WSTA have calculated that the excise duty bill for pubs now stands at approximately £1.9bn with a third of this, over £600m, coming from wines and spirits.
Miles Beale, Chief Executive of the Wine and Spirit Trade Association, said, “While the Government has focused on beer cuts previously to support British pubs, the reality is that this is only a job half done. Wine and spirits are ever more important to the British Pub and the Chancellor can do his bit to support them and landlords by cutting wine and spirits duty by 2%.
“British pubs represent the heart and soul of a community as well as being a significant employer in the UK supporting 577,000 workforce. While we are seeing 23 pubs closing a week we cannot stress how crucial it is for government to recognise how important the UK wine and spirit sector is to jobs, communities and the economy.'
Beale continued, 'But with higher inflation, the impact of the devaluation of the pound and the potential for duty increases, the pubs industry faces a potential triple whammy that will be devastating for the trade in 2017.
'Our new economic report shows that a 2% cut would boost the wine and spirits industry economic contribution by £2.9bn and also boost Treasury revenues by £368m. There is no better time for the Government to support British pubs and “make the cut” to wine and spirits duty”
In the last year, 125 million bottles of wine were sold in UK pubs and 49 million bottles of spirits were drunk, worth the equivalent of £110,000 to each UK pub (£70k from spirits; £40k from wine).
Since 2012, the value of wine and spirits sold in the pub has increased by £549m. £293m of that comes from sales in the past 12 months alone and represents +11% increase in sales since 2012 and +5% in the last year. This is partly due to the increasing popularity of drinks like sparkling wine and the gin.
Gin sales in our pubs, bars and restaurants have grown more than any other spirit sold in the 12 months (to 1/10/16) up +19%, on the same period last year, worth £619m.
Wine is now the nation’s most popular alcoholic drink. Sparkling wine sold the equivalent of over 16 million bottles, worth £768 million, in the on trade in the 12 weeks (to 1/10/16) a whopping +37% on the same period last year.
The latest CGA research shows that 2,428 pubs closed in the UK between 2014 and 2016 and were not replaced by new openings – this works out at 23 pubs closing a week.
A modest 2% cut to wine and spirits in the March Budget would be worth £594 for every UK publican. This would pay for the Landlord’s personal licence (the average cost is around £300) and still have money left over to pay for the pub football team’s strip.
It’s not just the publicans who would benefit from a windfall, a 2% cut to wine and spirit duty at the next Budget would boost the Chancellor’s coffers by a further £368m as the industry grows and revenues increase according to independent forecasters EY.
These calculations are backed up by a recent duty cut success story. After a freeze in wine duty in the 2015 Budget, wine duty income increased by £136m (+3.6%) the following year and after a 2% cut in spirits duty that year, spirits duty income increased by £124m (+4.1%) over the same period.