Smugglers and booze cruise operators are likely to be the only beneficiaries of this week's Budget, the UK drinks industry has warned.
UK consumers will now pay more tax on a bottle of wine than anywhere else in the EU following the Chancellor's decision to increase alcohol duty 6% above inflation, equating to 14p on a bottle of wine. He also ended the decade-long freeze on spirits duties, slapping 55p on a bottle.
"The only winner in this will be the Calais retailers who must be rubbing their hands together as consumers go looking for cheaper booze," said Matthew Dickinson, commercial director of Thierry's Wine Services.
The Wine & Spirit Trade Association said that the budget would be an incentive for smugglers as well as legal cross-Channel shoppers. "Following a decline in cross-Channel shopping over the past few years this budget is likely to revive its popularity," said chief executive Jeremy Beadles. "We will have to keep a close eye on it over the next few months to see what needs to be done to tackle it."
Wine and spirits were not the only sectors to be affected, with beer up 4p a pint and cider up 3p. "At a time of increasing raw costs this is a massive blow to the brewing industry," said Cobra Beer CEO Adrian McKeon. "Duty on beer is already at a very high level compared with the rest of the EU."
The Chancellor justified the rises by arguing that alcohol had become more affordable in recent years. "In 1997 the average price of a bottle of wine in a supermarket was £4.45 in today's prices. Today the average bottle will cost about £4," he said.
However, others claimed the move only punished responsible consumers who were already feeling the pinch, with the Scotch Whisky Association saying distillers were "astonished" by the Chancellor's decision.
Bargain Booze MD Matthew Hughes agreed, calling it "the most ridiculous Budget statement of all time".
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