Gin boom boosts spirit revenues above beer

6th June, 2017 by Arabella Mileham

The booming sales of gin have pushed the revenue of spirits above that of beer for the first time, according to the WSTA.

It follows the latest figures from the HMRC, which showed that the Treasury took around £3.38 billion from spirit drinkers in revenue, up 7% from the 2015-16 figure, or an increase of £225 million, compared to £3.32 billion from beer drinkers.

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This was ahead of wine, which rose 5%, to $4.17 billion, and contrasted to the 1% rise in beer sales, and 3% fall in revenue from cider.

The chief executive of the WSTA Miles Beale said the boom was in part due to the rising popularity of gin, which saw domestic sales of more than £1 billion mark for the first time last year, prompting it to be added to the Office of National Statistic’s (ONS) inflation basket for the first time in March. However he warned that the 3.9% rise in alcohol duty imposed in the Budget in March by Chancellor Philip Hammond could hamper this growth by adding around 30p to the price of a bottle.

“The 7% increase on revenue takings came as a result of the Chancellor freezing spirit duty in 2016 and allowing the industry to grow and invest,” he said. “It proves the point that cutting or freezing spirits duty brings rewards, which is why the inflation busting rise in duty this year was such a disappointment and threatens the industry’s ability to invest, grow and export.”

Wine price at an “all time high”

It comes shortly after the WSTA warned that Brexit was pushing the price of a bottle of wine to an “all-time high”.

The price of an average bottle of wine rose 3% in 12 weeks to the beginning of 2017, a large acceleration compared to 1% increase between 2015 and 2017, taking the average bottle price of a bottle of wine to £5.56. But the WSTA pointed out that this figure did not take into account the proposed 3.9% rise in alcohol duty imposed by the Chancellor in March, which is expected to add a further 8p onto the average price of a bottle of wine.

The WSTA argued that more than half (56%) of the cost of a bottle of wine now goes on duty, equivalent to £2.16 and rising to £2.77 for a bottle of sparkling wine.

“Last year the WSTA predicted that Brexit and the fall in the value of the pound, compounded by rising inflation, would force the UK wine industry to up their prices. Sadly this is now a reality as an average priced bottle of wine in the UK is at an all-time high. Unfortunately, for both British businesses and consumers, we are clear that this is not a one off adjustment, but rather that wine prices will continue to rise,”  Beale said.

However, there was bright news with English sparkling wine leapfrogging French sparkling wine (other than Champagne) and Australian sparkling wine to become the nation’s fourth most popular sparkling fizz. It rose 8% during 2016 to sell around 3.5 million bottles, the second fastest growth behind Italian fizz’s 12% growth, albeit of a smaller base. English fizz currently comprises around 2.3% of the total UK consumption, behind Italian fizz (55.7%), Champagne (20.2%), and Spanish sparkling wine (15%).

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