WSTA blames duty hikes for falling sales

7th March, 2012 by Gabriel Stone

The Wine & Spirit Trade Association has highlighted falling UK alcohol sales as a warning that consumers cannot afford the government’s planned further duty hike in this month’s Budget.

According to the latest WSTA Market Report, compiled using data and analysis from Nielsen, CGA Strategy and the Wilson Drinks Report, off-trade wine volume sales fell by 2% in the year to 4 February, with spirit sales down by 1%.

In the on-trade, wine sales fell by 6% for the year to 24 December, while spirit sales declined by 2% in the same period.

Champagne volume sales were hit particularly hard, falling 6% in the off-trade and 12% in the on-trade. Some of this decline was picked up by sparkling wine sales, which saw volumes sales rise by 7% in the off-trade.

Although value sales rose by 5% across all alcohol categories, this performance was driven largely by VAT and excise duty increases.

With off-trade wine sales at lower price points suffering in particular, Nielsen data showed that customers are abandoning the category for alternatives such as cider, which was up 4% by volume, or British wine, which saw a 51% volume increase.

Within the spirits category, gin and vodka proved most resilient, with off-trade volume sales growing by 2% and 3% respectively. In the on-trade, it was malt whisky that continued its strong performance, seeing volumes rise by 31% over the year, with value up by 48%.

Commenting on these latest figures, Gavin Partington, WSTA interim chief executive, said: “It’s clear that many consumers continue to feel the pinch yet the duty escalator on alcohol continues to push prices up and sadly the Budget later this month threatens more of the same.“

If Budget tax increases go through as scheduled, tax on wine and spirits will have increased by 45% and 40% respectively since 2008. It’s a tax take that hurts consumers and undermines our industry’s efforts to support economic growth.

”His comments followed a call last month from the British Beer & Pub Association for a duty freeze, in which the group warned of the jobs threatened by increased pressure on the pub trade.

2 Responses to “WSTA blames duty hikes for falling sales”

  1. Chris says:

    “If Budget tax increases go through as scheduled, tax on wine and spirits will have increased by 45% and 40% respectively since 2008.”
    Please could you explain these calculations?
    In the budget March 2008 duty on Still Wine (5.5% – 15%) was approx £1.46 ex VAT, which equates to £1.72 inc VAT. If you base your 45% increase on ex VAT values this would work out at £2.12 a bottle, a whopping 17% increase on the current value of £1.81. Based on inc VAT values this would work out at £2.49, or £2.08 ex VAT (due to the variance in VAT rates between 2008 and 2012). This is still an increase of 15% on 2011. My anticipation is that the post-Budget duty rate (based on an average RPI of 5% across FY 2011-12 + 2% duty escalator) will be circa £1.94 ex VAT or £2.33 in VAT per bottle, a rise of 33% based on ex VAT values and 35.5% on inc VAT values. Some way short of the 45% claim.
    Clarity would be appreciated.

  2. John Wilson says:

    I very much doubt people shopping at lower price points are “abandoning the category” for British wine, which remains prohibitively expensive for most.

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