Wednesday, 22 April 2009

The Budget - another rise in excise duty on alcohol

The Chancellor of the Exchequer has just announced a further rise in UK alcohol excise duties. Briefly, the effect this will have on prices (in VAT-inclusive terms) are;

4p on a 75cl bottle of wine
5p on a 75cl bottle of sparkling wine
5p on a 75cl bottle of fortified wine
13p on a 70cl bottle of spirits (37.5% abv)
1p on a pint of beer (4.2% abv)
1p on a litre of cider

To put these latest duty rises into perspective, the duty on a 75cl bottle in March 2006 was £1.29. So a rise of 32p in 3 years is large(ish) in percentage terms, but not huge in money terms.

Far more damaging from the perspective of wine merchants (and consequently, of course, their customers) is the current poor exchange rate between the Pound and most other currencies, especially the Euro. 18 months ago, a Pound bought you 1.5 Euros. Now it buys you 1.1 Euros. Recent fluctuations in the rate have been volatile, to say the least, (the rate was down to almost 1:1, at the beginning of this year) which makes costing and pricing a difficult and frustrating exercise.

In a nutshell, the drop from 1.5 Euros to the Pound, down to 1.1 Euros to the Pound has effectively turned a £6 wine into a £7.50 wine and a £10 wine into a £12 or £13 wine. Which is very depressing for all concerned, from the growers, right through to the consumer. Still...... you wouldn't want to live without a nice glass of wine, would you?
Leon Stolarski

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