Duty freeze is a step in the right direction for the drinks trade

November 22, 2017, 6:00 pm
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Well, that’s a relief. After a year of mounting pressure on the UK’s drinks trade, the chancellor has announced a much-needed duty freeze for beers, most ciders, spirits and wines in his autumn budget. Cue the deluge of tabloid headlines celebrating a “Christmas gift” for the nation’s drinkers.

High-strength ciders (between 6.9% and 7.5%) are still in the firing line, though, thanks to their association with hazardous and dependent drinking. They will be targeted by a higher duty band from 1 February 2019. With minimum unit pricing in Scotland (and potentially Wales) set to hit these suppliers hard as it is, they may well have to consider some drastic cost-saving measures.

For the majority of the trade though, it is rather good news – although not the duty cut many would have hoped for. Indeed, the Wine and Spirit Trade Association estimates the move will save Britain’s wine and spirit trades approximately £247m. That’s not to be sniffed at.

It certainly warrants a pleasant toast. Or three. One insider at a major supplier tells me, rather jubilantly, that he’s “hoping he won’t wake up”.

Personally, I must say I was shocked, given the chancellor’s history. After all, Hammond’s government was the one that hiked duty earlier this year, breaking with a freeze imposed in 2015, to much dismay. Seriously, cheers Phil. Every little helps.

But it doesn’t necessarily mean it will be smooth sailing from here on out. Weakened sterling continues to pressurise booze brands, particularly those struggling with import costs.

And sources warn that although many suppliers are reluctant to push through a second round of wholesale price rises this calendar year, they may be forced to, come early 2018. One says:

“Unless there is a significant shift in the exchange rate, suppliers can’t keep mitigating these costs.”

Meanwhile, the government refuses to sober up on the realities of trading post-Brexit, as our fateful departure draws closer. Were our esteemed leaders to cement a proper transitional deal – or, dare I say it, actually finalise an agreement on anything with our soon-to-be divorcées across the channel – you’d find me euphorically necking a bottle of Aldi prosecco faster than you can say “bring back those beautiful blue passports”.

Jokes aside, today marks a real step in the right direction. Hopefully the first of many.

SourceL Daniel Woolfson, The Grocer

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