“The most radical simplification of alcohol duties for over 140 years” has taken place in the UK.
To the joy or dread of drinkers across the country – depending on your preferred tipple – Rishi Sunak has, according to himself, “taken advantage of Brexit to simplify the duty system”.
The overhaul will see alcohol tax based on its strength rather than its volume, causing stark price-changes, in a bid to encourage cutting back.
And while hospitality firms are not happy, teetotal Prime Minister Sunak insists businesses and consumers will benefit from the changes.
But drinkers could be hit, whatever their poison, because some producers are reducing the alcohol content in some of their drinks to help keep down the price.
On top of the adjustments, Chancellor Jeremy Hunt announced in his March Budget, that the freeze to alcohol duty would end on August 1 and increase by inflation, at 10.1%.
Here we go through the changes and how they will impact drinkers
The below changes will hit retailers, however businesses may not choose to pass them on to customers, meaning price adjustments will vary for consumers.
Wine drinkers are among the victims of the changes. The Wine and Spirit Trade Association (WSTA) says they will experience the “biggest single duty hike since 1975”.
The increase will see duty rise by 44p on a bottle of wine, which when combined with VAT will mean consumers will pay an extra 53p, according to the WSTA.
A glass of wine is expected to rise by around 5p.
Miles Beale, the group’s CEO, said the change will “be a crippling blow to the UK alcohol industry and consumers who will have to pay the price for tax rises during a cost-of-living crisis”.
Sparkling wine, however, will see its price drop by 19p, providing a tax duty fall of 7%.
Port and Sherry
Those who drink wine’s stronger, fortified cousin, Port, will experience the biggest price change.
A bottle of the Portuguese export will increase by more than £1.50, with an alcohol duty increase of 44%.
Duty on 18% cream sherry will go up from £2.98 to £3.85, with VAT adding up to an increase of more than £1 a bottle.
Steve Moody, executive chairman of Fells, the largest distributor of port in the UK said: “Hitting the port industry with red tape and a tax hike seems go against the pro-growth agenda that this government that professes to support.”
He added: “A shock price hike like this will drive a coach and horses through these fragile supply chains.”
Watch: How will alcohol duty changes affect you?
Spirits, already the UK’s most taxed alcoholic drinks, will also go up in price, however pre-mixed cans will not.
Kathy Caton, co-founder of Brighton Gin, said the change is “incredibly unfair on consumers who should not be facing higher prices for their favourite drink, especially while the cost of living and inflation crises put ever-increasing pressure on household budgets”.
The total tax on a bottle of gin or vodka will go up by around 90p, while the cost of a bottle of Scotch Whisky will go up by almost £1, according to the Scotch Whisky Association.
But pre-mixed cans will get cheaper. A 250ml can of 5% G&T will fall by 5p, for example.
Beer and cider
The main beneficiaries of the changes pub-goers who drink beer and cider, because the government has cut the duty charged on draught pints across the UK by 11p.
“We have taken advantage of Brexit to simplify the duty system, to reduce the price of a pint, and to back British pubs,” said the prime minister, meaning “price of your pint in the pub is protected”.
It means the pints of cider and beer in the pub should stay the same price and with inflation running so high, proponents of the changes would call the price freeze a price cut.
The cut to duty on draughts drinks also ensures the price of a pint in the pub is 11p cheaper than the supermarket.
However, the British Beer and Pub Association (BBPA) said brewers will pay 10.1% more tax on bottles and cans of beer from Tuesday, meaning tax will make up around 30% of the cost of a 500ml bottle.
Despite the draught freeze, the BBPA said the tax increase on packaged beer will add an extra £225 million of costs per year across the industry.
Producers reduce alcohol content to keep down costs
According to the British Beer and Pub Association (BBPA), several beers, including Foster’s and Old Speckled Hen, have cut their alcohol content by around 0.3% as part of a trend some are calling ‘drinkflation’.
Lowering alcohol content reduces the amount of tax payable on the bottle or can, with most of the reductions saving 2-3p a sale.
At the end of last year, a can of Foster’s was 4% alcohol and the tax duty payable on it was 34p, but in January this was cut to 3.7% with a duty of 31p.
Old Speckled Hen has been reduced from 5% to 4.8% and Spitfire Amber Ale has fallen from 4.5% to 4.2%
But savings made by cutting alcohol strength are not necessarily being passed to customers, with changes often made to recoup losses from hikes in production costs.
Emma McClarkin, Chief Executive of BBPA said: “Unfortunately, whilst inflation is slowing, businesses and consumers are still very much feeling the pinch.
“Our industry will continue to work hard to mitigate the impact of costs to customers but we really need the government to step up and act on inflation before beer becomes a luxury, rather than the accessible, widely-enjoyed drink it always has been.”