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Budget 2018: The drinks industry reacts

By Phoebe French

With the Chancellor’s decision to freeze duty on beer, cider and spirits (but not wine), cut business rates for small businesses and undertake a review of small breweries’ relief, we gauge the industry reaction to this year’s Autumn Budget.

Image: @HMTreasury

As db reported yesterday, this year’s Autumn Budget brought welcome news for the UK beer, cider and spirits industries, however delivered a “hammer blow” to wine.

As a result of yesterday’s decision, which will come into effect on 1 February 2019, drinkers will save an average of 2p on every pint of beer, 1p per pint of cider in 2019 and 30p on a 70cl bottle of Scotch whisky. However, consumers will be paying 7p more for a bottle of still wine and 9p for both still and fortified wine in 2019.

Also announced yesterday was rate relief for businesses with a rateable value under £51,000, cutting rate bills by a third for around 90% of independent small business, including pubs.

Although this will mean annual savings of up to £8,000 for some pubs, trade bodies including the Campaign for Real Ale (CAMRA) has criticised the scrapping of “pub specific rate relief” meaning that those venues with a rateable value in excess of £51,000 will lose out.

The Chancellor, Philip Hammond said in his statement: “I have received numerous representations from my H and RHFs on one particular subject, I will therefore be freezing beer and cider duty for the next year, keeping the cost of beer down for patrons of the Great British pub.

“And, in response to the concerted lobbying of my Scottish Conservative colleagues, I will also freeze duty on spirits, so that we can all afford to raise a wee dram to Ruth Davidson on the arrival of baby Finn, saving 2p on a pint of beer, 1p on a pint of cider, and 30p on a bottle of Scotch or gin compared to the inflation assumption in the OBR forecast, while proceeding with the usual RPI increases on wine.

“As promised at Autumn Budget 2017, so-called white ciders will be taxed at a new higher rate.

Of business rates he added: “The change our High Streets face is irreversible and it will take them time to adapt to it. But I know that many small retail businesses are struggling to cope with the high fixed costs of Business rates.

“Since 2016 we have introduced business rates relief measures worth £12 billion and many of these reliefs will have benefitted High Street businesses.

“But today I can go further: At the next revaluation in 2021, rateable values will adjust to reflect changes in rental values. But I want to help retail businesses now.

“So for the next two years, up to that Revaluation, for all retailers in England with a rateable value of £51,000 or less, I will cut their business rates bill by one third.

“That’s an annual saving of up to £8,000 for up to 90% of all independent shops, pubs, restaurants and cafes”.

Scroll through to view the reactions from key trade bodies and on social media, including a much-circulated infographic on wine duty per bottle across Europe from owner of Château Bauduc, Gavin Quinney.

Wine and Spirit Trade Association

WSTA chief executive Miles Beale.

Miles Beale, chief executive of the Wine and Spirit Trade Association said: “We welcome the Government’s decision to freeze duty on spirits, which will support this great British sector to invest, grow and create jobs – as well as supporting the public finances through increased revenues.

“However, the decision by the Chancellor to increase wine rates significantly is a hammer blow to this great British industry. It actively undermines a sector that has been hardest hit since the Brexit Referendum and will be thoroughly unwelcome for the 33 million consumers of the nation’s most popular alcoholic drink.

“This inflationary rise is grossly unfair, unjustified and counter-productive. The UK is the world’s biggest wine trading nation and, as such, deserves government’s support, not punishment.

“The wine industry is, unfortunately, no stranger to harsh treatment from Chancellors. Since 2012 wine overtook beer as the largest contributor to the public purse through duty payments, and no alcoholic drink has paid more to the Treasury since then. The announcement means that only twice since 2003 that Chancellors from either party have showed their support to an industry employing some 190,000 people across the country.

“By increasing the UK’s already excessive duty rates the Chancellor will clobber wine importing businesses, including thousands of SMEs; stifle growth of our flourishing English wine industry; and raise prices for consumers”.

“The failure to rebalance this unfair tax burden on the wine industry will stifle business’s ability to invest and grow and damage the sector which last year brought in almost £19 billion in economic activity.

“The increase goes against recent Budget success stories. After a freeze in wine duty in the November Budget last year, between February to August 2018, wine duty income increased by £39 million up 2% on the same time last year.

 “The freeze in duty on spirits will be hugely welcomed by the hundreds of producers across the UK, and over 280,000 people employed across the spirits sector. Gin exports are now worth over £532 million, and the freeze announced will give UK spirit producers the confidence to continue to expand their export markets and seek to take advantage of future trading opportunities.

“However, this Budget represents a missed opportunity. It ignores the evidence from the last Budget that Treasury coffers actually increase following a freeze in wine duty. The inflationary rise in wine duty suggests the Chancellor has closed himself off to the concerns of our world leading industry and is wildly out of touch with British consumers.

“Moreover, the announcement puts us further out of step with excise duty rates internationally. It won’t please those wine-producing nations who want to agree FTAs with the UK either. It forces British businesses to compete on an ever more uneven playing field, which is grossly unhelpful particularly when final preparations are being made to leave the EU – potentially without a deal.”

Society of Independent Brewers

(Photo: SIBA)

Mike Benner, chief executive of SIBA said: “The Government has announced a review of Small Breweries’ Relief. SIBA, as the voice of British Independent brewing will be front and centre in working with Treasury to usher in the next chapter of SBR. We will ensure the smallest breweries are protected, growth is incentivised and the sustainability of UK brewing is the centrepiece of reform.

“A freeze in beer duty is good news for UK brewers, publicans and beer drinkers. A planned rise in line with inflation would have meant a £100m hit to Britain’s brewers. We will be toasting the Chancellor this week with a pint of British independently brewed beer.

“There is also good news in this Budget via the £1.5bn ‘high street rescue plan’, cutting business rates for most English pubs, craft beer bars and taprooms by a third. As the policy only applies in England; brewers, publicans and responsible drinkers in Wales, Scotland and Northern Ireland will want their devolved administrations to back this proposal, too.

“We’re delighted the Chancellor has listened to calls from industry by announcing plans for a new digital services tax which will help to rebalance taxation between community bricks and mortar and the global tech giants. We’d like to see the Chancellor go further and ring-fence a share of the revenue generated from this new tax to permanently lessen the burden on community pubs and the breweries that supply them. When some small pubs owned by brewers pay more in business rates than Amazon and eBay do in corporation tax, we have to find a more permanent solution.

“Small brewers looking to take on an apprentice will welcome the employer contribution being halved from 10% to 5%. We need more skilled people to keep the beer flowing and this proposal will help to train the next generation of brewers and brewsters”.

Mangrove

Nick Gillett, managing director of UK spirits distributor, Mangrove UK, said: “It’s very welcome news from the Budget speech that the Government has frozen Spirits Duty. Recent research by EY for the Wine and Spirit Trade Association highlighted that this represents a favourable outcome for the UK economy: projections forecast a resulting boost to the UK economy by £1.1bn and creation of an estimated 27,000 jobs by 2022.

For Mangrove UK’s portfolio, the announcement means less disruption and price stability for consumers, at least until Brexit.”

Diageo

Charles Ireland, general manager for Diageo Great Britain, Ireland and France, said: “We are delighted to have a Chancellor who wants to help drinkers of Scotch, Gin, and our hard-pressed pubs. Philip Hammond has listened to the industry and his Scottish colleagues, and has acted to support our world beating spirits industry.

“We thank those within the party of Government who have made the case for Scotland and stood up for the 50,000 jobs this industry supports, with particular thanks to Secretary of State for Scotland David Mundell, Ruth Davidson and the Scottish Conservatives. We also recognise the interventions by the SNP, DUP, Lib Dems and Labour that helped secure the decision”.

The Scotch Whisky Association

SWA chief executive Karen Betts.

Karen Betts, SWA chief executive, said: “The Chancellor has made the right decision for the public finances, the industry and for consumers.

“The continuation of the duty freeze is a very welcome show of support for the Scotch Whisky industry, which plays an important role in the UK and Scottish economies and which is one of the UK’s most successful exporters.

“Time after time, the industry has shown that a stable rate of tax both boosts government revenue to help support vital public services and creates an environment which encourages investment in future growth.

“We have welcomed the support shown to the industry by the politicians from across the UK and the political spectrum who have backed our campaign and have stood up for the industry and the communities it supports.  We welcome too the sound course set by the Chancellor, which supports the industry’s global competitiveness, nurtures growth and backs jobs and investment.

“However, the Scotch Super Tax remains, with £3 in every £4 spent on the average priced bottle of Scotch in the UK still collected in taxation, and a significant disparity between what consumers pay in tax on Scotch and other alcoholic products.

“HM Treasury should move quickly to begin detailed discussions with the industry about long-term reform of the UK’s alcohol tax regime.”

The British Beer & Pub Association

Brigid Simmonds, chief executive of the British Beer & Pub Association, said: “Pub-goers across the UK will be toasting the Chancellor following his decision to freeze beer duty. This early Christmas present will save brewers, pubs and pub-goers £110 million and secure upwards of 3,000 jobs that would have been lost had beer duty gone up.

“Clearly, the Chancellor has listened to the seven in 10 people in the UK who said they’d like to see beer duty cut or frozen in the Budget. Pubs are so important to their local communities and 82% of the beer we drink here is brewed in the UK.

“This is a big step in the right direction and a huge help for pubs across the UK that are struggling. I hope we can continue to build on this success in the future and we will continue to celebrate the vital role that local pubs play in communities and highlight the ongoing pressures they face by supporting the Long Live the Local campaign.

“The Chancellor’s announcement to cut business rates for high street and other small businesses is also great news for a lot of pubs. This will benefit community pubs by £120 million over the next two years, securing the viability of many locals across the country. We would urge the Chancellor to use the announced Digital Services tax to provide further support for all pubs large and small.

“Furthermore, the Chancellor’s decision to announce a review of Small Brewer Relief is most welcome.

“The announcement that the contribution by small businesses for the Apprenticeship Levy will decrease from 10% to 5% is also very good news for pubs. Likewise, so is the increase in investment allowance from £200,000 to £1 million. BBPA members invest over £200 million in their pubs each year.

“These decisions are particularly welcome in light of the additional cost pressures facing pubs, such as increases in the national minimum wage and the previously announced increase in the climate change levy.

“Overall, this has been a great Budget for pubs and pub-goers. Cheers Phil!”

Brewhouse & Kitchen

Kris Gumbrell, co-founder of Brewhouse & Kitchen said: “We are pleased to see that the 2017 decision to freeze beer duty is still in place. Pubs have always been community hubs, providing a welcome backdrop for many of life’s greatest moments. Any increase in beer duty would fly in the face of the Budget’s efforts to preserve UK high streets and would no doubt push more customers towards supermarkets to purchase their beer.

“The continued freeze, along with the Digital Retail Tax and Business Rate reliefs for small businesses, will promote growth for standalone pubs, however will not help groups that have numerous establishments. The UK hospitality industry is worth nearly £100bn and employs 3 million people, something that any increase to the already difficult to swallow beer duty would threaten.

“The Chancellor of Exchequer has promised an additional 800,000 jobs by 2023, something that may not be achievable if more financial pressure is placed on the hospitality sector. We are, however, hopeful for the future and confident that Brewhouse & Kitchen will survive and even thrive under these conditions.

“In what has been a budget charged with preserving the retail economy, it has finally been recognised that hospitality goes hand in hand with the shops on the high street, helping both sectors on their evolutionary path towards experience-led as opposed to product-led shops, bars, restaurants and pubs, something that Brewhouse & Kitchen wholeheartedly support”.

The Campaign for Real Ale

CAMRA’s national chairman, Jackie Parker, said: “A decision to freeze Beer Duty is welcome, and will no doubt go some way to keeping the British pub-going tradition affordable.

“However, the decision to implement the business rates relief for some and not all pubs is not enough to help protect pubs from extinction – we need wholesale reform of the business rates system to tackle the grossly unfair burden placed on pubs.

“There must be long-term change to business rates, Beer Duty and the Pubs Code to secure the future of our treasured locals, and we’re looking forward to encouraging MPs to take further action at our Mass Lobby Day tomorrow”.

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