The industry reacts to the new alcohol duty hike

Last Tuesday (1 August), the significant shake-up of alcohol taxation arrived, meaning that tax is now levied based on a drink’s strength. This means that the overall duty on most wines and spirits have increased, while taxes on lower alcohol drinks and most sparkling wines have fallen. The changes, which were originally scheduled to be applied for February of this year but were postponed, include a 10.1% rise in alcohol duties. Drinks with an alcohol by volume (ABV) below 3.5% are now taxed lower, while taxes on drought pints have remained unchanged to “support” pubs. The overhaul has drawn criticism, as it will no doubt impact premium spirits and wines, as well as pose more challenges for already struggling businesses. While the new system is due to receive further adjustments in February 2025 based on alcohol content, the co-founder of Choosewisely.co.uk, Tara Flynn, says that this could have “severe repercussions for struggling hospitality businesses”. “The major shake-up of alcohol taxation could even signal a potential end to Brits' long-standing obsession with booze,” Flynn says. “With a substantial 10.1% rise in alcohol duties, most wines and spirits are seeing price increases, putting additional strain on already financially-challenged pubs, bars, and restaurants.” She continues: “As the cost-of-living crisis continues, these changes might fundamentally alter how Brits view and consume alcohol, leading to a shift in behaviour away from traditional drinking culture. Boozers up and down the country face an uncertain future”. As people will be paying more for alcoholic beverages, it might seem like more will gravitate towards non-alcoholic drinks to make their trips to the pub cheaper. However, Chris Bax, the co-founder and distiller of premium 0% ABV drinks Bax Botanics, doesn’t think this is quite so straight forward. When asked if the new alcohol duty will potentially make people drink non-alcoholic drinks, Bax says: “I don't think it’ll make changes to people's habits from drinking alcohol to drinking non alcohol, because a few surveys have said that heavy drinkers will be affected, but when it comes to moderate drinkers – which are most people – their drinking habits will be likely unchanged. There is a correlation between duty rises and reducing drinking less among the heavy drinkers rather than the moderate drinkers. “I think the people who are really going to be hit by this are the small brands who are already struggling and also the consumer. I believe in mindful drinking and I believe that people should have a bit of what they like – it's a real shame at a time of prices rising across the board that we've now got to deal with this as well.” From the perspective of an advocate for hospitality venues, The Night Time Industries Association (NTIA) has already voiced its concerns and has strongly condemned the government’s decision to increase alcohol duty on the night time economy sector. CEO of the NTIA, Michael Kill, says: “The recent actions taken by decision-makers to implement the biggest single increase in alcohol duty in almost 50 years, coupled with the wilful withdrawal of support and the imposition of already excessive taxes, have ignited anger and frustration across the night time economy sector.” While night time economy businesses, which comprises bars, restaurants, pubs, clubs and entertainment venues, have demonstrated resilience in their efforts to survive and contribute to society, the NTIA believes that this alcohol duty will further inflict damage on an already struggling industry. “From the withdrawal of non-domestic energy support to changes in the late-night levy, the withdrawal of regulatory easements and now the biggest increase in alcohol duty for several decades, the consequences of these decisions are becoming increasingly burdensome,” Kill continues. “We cannot help but feel neglected by the very authorities we have supported during the pandemic crisis. The speed with which we seem to be forgotten is disheartening, especially given the pivotal role our businesses play in driving economic growth and fostering vibrant communities.” Bax trades under a small drinks label, and despite his drinks being non-alcoholic, he has found it quite difficult to get traction all the same. Meanwhile, the night time industry – which heavily relies on the buzz that booze brings – is braced for the further destruction of businesses, having to pass on the cost burden onto consumers, destroying the vibrancy of communities, and undermining hospitality’s general recovery efforts. The NTIA has urged the government to reconsider this action, with Kill saying: “I urge decision-makers to recognize the profound impact of their actions and the ripple effects they will have on our industry, workforce, and society as a whole. We are not asking for special treatment but simply for fair consideration, understanding, and support as we navigate the road to recovery. “We need to find solutions that address the challenges faced by our sector, not squeeze the life out of it. Our industry is essential to the fabric of our communities, and a thriving night time economy benefits us all.” The NTIA believes in the importance of balanced policy-making, having called this alcohol duty increase “arbitrary” for failing to consider the broader implications for the night time economy and its stakeholders.