‘A kick in the teeth’: The Budget tax change which could push the cost of wine higher
PUBLISHED: 05:30 08 November 2018 | UPDATED: 07:42 08 November 2018
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The boss of a major Norfolk wine company has warned that a little-publicised tax change in the Budget could push up the price of wine.
The government has removed an option for drinks companies which brew from concentrated alcohol to pay duty before they dilute the product.
That means that from 2020 they will have to pay the charge on the volume of the finished drink – and so the bigger volumes will incur higher duty prices, which may have to be passed to shoppers.
Companies which ferment fruit cider, low-cost and low-alcohol wines from a high-alcohol essence will see their margins squeezed, while the Wine and Spirit Trade Association has said it could cost “several hundred jobs” in the industry.
Mark Lansley, chief executive of Norfolk’s Broadland Wineries, said it could push up the price of a bottle of wine by up to 50p.
Mr Lansley said: “This is a kick in the teeth for the working man. The cheap, low-alcohol wines and ciders on supermarket shelves will disappear, and could be replaced with stronger, imported wines.”
The change will predominantly affect British wine producers, which import grape husk to be diluted into lower-strength wines, which can be sold more cheaply as a lower duty is due.
Mr Lansley said: “Our margins are already a squeeze so we have two options; we either produce less, or we have to put prices up.”
As well as low ABV (alcohol by volume) wines, fruit wines, chocolate wines and British-produced sherry equivalents will be affected.
“It’s the pensioners who like a tipple at Christmas, the low-income families who enjoy a glass of wine that will be affected,” continued Mr Lansley.
Cawston-based Broadland Wineries is on track to turn over £70m in the year ending March 2019, and has been preparing for this change since it was warned about its potential seven years ago.
The company best known for its Three Mills wine began investing in imported wine brands as well as creating new products which will remain valuable once the legislation is changed in April 2020.
“This will damage innovation in the industry,” said Mr Lansley. “With prices being forced up it drives out the incentive for producers to manufacture wine with a lower alcohol content, and for consumers to buy it.”