On-trade

Chancellor putting British pubs at risk

The UK’s Wine and Spirit Trade Association and the Association of Licensed Multiple Retailers have teamed up to warn that more British pubs will be under threat of closure if the Chancellor fails to scrap his punitive five-year plan to raise alcohol duty there.

Wine and spirit sales in UK pubs account for 36% of alcohol sold across the bar, worth almost £6 billion to pubs in the 12 months to September.

Across the country however publicans had to pay huge duty bills totalling £843 million on wine and spirits alone into the Treasury coffers.

The two organisations also pointed out that at the current rate the total duty collected from British pubs by the end of the year is set to soar to over £2.1 billion if Philip Hammond increases the already “excessively high” duty rates on alcohol, with the result that pubs across the country could be hit by a duty tax hike for a second time this year.

In March, the Chancellor introduced an inflation-matching duty increase of 3.9% which added 30p to an average-priced bottle of spirits, 8p to a bottle of still wine and 10p to sparkling wine.

“Despite this rise” states the ALMR & WSTA, “the Chancellor now plans yet another increase to spirit duty, this time at 3.4% just eight months after the last one. The Chancellor’s actions stand to add another 26p to a bottle of spirits, another 7p to still wine and 9p on sparkling wine.”

Describing them as “sneaky inflationary increases” the two organisations have called on the UK government “to do more to support the historic British pub following a spate of pub closures. On average 21 pubs are closing each week across the UK, and further rises in duty rates will only increase pressure”.

According to a joint statement the wider on-trade is becoming ever more dependent on wine and spirits, with sales of those categories accounting for 46.2% of new openings in the last two years compared to just 39% of closures.

On average four new spirit brands were added to the UK pub’s back bar since 2013, meaning that there are now an average of 36 spirit brands behind the bar according to new research by CGA Strategy on behalf of the WSTA.

“Wine and spirits duty accounts for more than a third of annual pub sales,” pointed out WSTA Chief Executive Miles Beale, “We’re calling on Philip Hammond to help save our British pubs by freezing duty, allowing them to reinvest and stay in business.”

He also pointed out that previous decisions to freeze alcohol duty brought in more revenue for the Treasury coffers, not less.

“So a duty freeze makes sense for everyone – from the Chancellor, to pub and bar owners and consumers,” he said, “With the last rise having come just eight months ago, freezing duty is the least Philip Hammond can do!”

Kate Nicholls, Chief Executive of the Association of Licensed Multiple Retailers, added, “Pubs in every region of the UK are facing a perfect storm of rising costs and softening consumer demand. Uncertainty and barriers to growth and investment are being exacerbated by the instability being created by Brexit and many venues are looking for positive action from the Government to provide support.

“An increase in duty rates is only going to pile on more costs which pubs cannot continue to absorb – prices will start to rise and threaten consumer demand even further.”

The UK Budget is this Wednesday.

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