Gin makers call for a freeze in spirit duty
Gin makers have joined forces to call for the Chancellor to freeze spirit duty, to alleviate fears that high taxes could stifle the British gin boom.
17 top distillers have teamed up with the Wine and Spirit Trade Association (WSTA) and written to Philip Hammond and the Secretary of State for Business, Energy and Industrial Secretary, Greg Clark, raising serious concerns over a planned increase to spirits duty at the Budget in November.
Gin duties collected in the UK will go up around £25 million on last year if Hammond raises duty again for the second time this year. In March he increased spirit duty by inflation at 3.9%, which added 30p to an average priced bottle of spirits. Yet despite this rise, the Chancellor is expected to increase duty again, by 3.4%, adding another 26p to each bottle.
The WSTA said that through these measure the Government expects to secure £2 billion from British gin over the next five years.
The gin distillers’ peal for a freeze comes a week after frustrated English wine producers signed a joint letter to Hammond calling for him to scrap the planned wine duty hikes and support the home grown wine industry.
Matthew Gammell, co-founder of Pickering’s Gin in Edinburgh, said: “In 2016 Sumemrhall Distillery paid 31% of its annual turnover in duty alone. Our bottles retail at £29.95, which means that 45% of the money spent on a bottle of Pickering’s gin goes on duty and VAT.
“These hugely unfair tax burdens mean that cash flow is severely restricted when a business like ours is trying to grow. The current proposed increase in duty of 3.4% would mean an increase in duty of £24,500, which for us is the equivalent of another employee. We would like to continue to grow and boost the British economy, but it is becoming increasingly tough to remain competitive in the marketplace.”
Alex Wolpert, founder of the East London Liquor Company, said: “We absolutely support a freeze to spirit duty, particularly as this is an opportunistic second increase this year at a time the government knows only too well that alcohol sales increase considerably over the festive period; duty already accounts for approximately 40% of our bottle price. With the current economic landscape, including the cost of living increasing and wages at an all-time low, the consumer ends up being the one to foot the chancellor’s duty increase, perpetuating the problem of the public’s expendable income being further reduced.”
Miles Beale, chief executive of the WSTA, said: “The gin renaissance has benefited from the craft cocktail craze which has been sweeping the country in the last couple of years. We have seen a rapid growth in the number of distilleries in the UK and a new wave of UK spirit makers are turning their hand to gin production in a bid to keep up with the thirst for new gin experiences.
“However, the government is stifling the gin boom by adding to its already high tax bill this year. British gin is a global phenomenon which is why we are asking the Chancellor why he is penalising what Britain does best? By freezing spirit duty he would be allowing the industry to invest, create jobs and grow.”
British gin is now worth £1.2billion in sales to shops, pubs, bars and restaurants with more than 45 million bottles sold last year, an increase of 36% since 2012. The number of distilleries in the UK has more than doubled to 273, with 40 opening in 2016 alone.
The WSTA has calculated that if the government goes ahead with its plans for duty hikes, then tax on a bottle of gin will go up by more than one pound from £8.05 in 2017 to £9.13 by 2021.
Gin distillers who signed the letter include:
East London Liquor Company
City of London Distillery
Gordon Castle Gin
Juniper Green Gin
Bramley & Cage
Thames Distillers Ltd
Union Distillers Ltd
Dunnet Bay Distillers
William Grant & Sons