UK wine duty hike will not impact festive promotions

While leaving wine producers and importers furious at the decision to increase duty on wine while freezing taxes on beer and spirits, Philip Hammond has at least made a concession on when the new rates will be introduced.

The rise in excise duty by the rate of inflation does not take place until 1 February.

This means that all Christmas deals and promotions will not require renegotiation of prices with retailers, who will already have printed their own Christmas promotional literature and begun to prepare in-store displays. If the duty rise had taken effect overnight, as has been the case historically, multiple retailers would undoubtedly have wanted wholesalers and importers to bear the difference.

In addition, by choosing 1 February, the chancellor is also imposing the duty rise on wine at the quietest period of the year for sales to the consumer.

Further, many importers negotiate their annual deals won sales projections and currency rates early in the New Year with overseas producers. Many issue new price lists at about that time and so the 1 February date gives a measure of certainty that prices can be held for much of 2019.

But it is not complete certainty. Hammond has warned that if Britain endures a no-deal Brexit and crashes out of the EU on 29 March next year, he would be prepared to deliver a spring Budget to meet the financial problems that would cause.

And by his arbitrary action to raise duties on wines but not on beer or spirits he has again demonstrated that alcohol is an easy target for a chancellor looking to raise revenue.

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