It is unfortunate that the latest increase in wine duty rates, sponsored by the government, coincides with the steepest decline in living standards since the 1950s. Although not the main source of our misery under the Tories, the timing feels cruel.
Effective from 1 August, the hike will add 44p to most bottles of still wine. This increase is a result of inflation-indexed duty rise and a new alcohol taxation system based on alcoholic strength. The new system, considered the most significant change to wine duty in 140 years, simplifies the process by linking duty to alcoholic strength. Each 0.5% increase in ABV adds 9.9p in duty per 75cl bottle.
The simplification of the system has some positive aspects. Sparkling wine lovers will benefit from the removal of the punitive premium on fizz, aligning its duty rate with still wine. This means sparkling wine duty will actually decrease by 7% or 19p per 75cl bottle.
The implementation of the new system is phased. Wines with ABV between 11.5% and 14.5% will be taxed as if they were 12.5% until February 2025, after which they will follow a sliding scale based on 0.5% increments. Over the next 18 months, many producers will aim for an ABV of 11% to avoid moving up to the higher duty bracket. The wine trade is concerned about the potential impact on quality and price due to this shift. The duty increase may also intensify existing efforts by businesses to reduce costs, such as increased yields in vineyards, tighter producer margins, sourcing distressed stock, and buying in larger quantities, to meet retailers’ price points. However, the lower duty for lower ABV wines may also encourage producers, especially at lower price points, to reduce ABV levels.
There are two main methods for achieving lower ABV wines, neither of which are conducive to quality. One is harvesting grapes before they are fully ripe, resulting in leaner wines. The other involves stopping fermentation before all the sugar is converted into alcohol, resulting in sweeter wines.
Therefore, wine consumers are left with several choices: drink sweeter wines, drink leaner wines, drink more sparkling wines, drink less overall, or accept the increased prices.
Six wines on the right side of duty changes
M&S Classics Vinho Verde
Portugal 2022 (£8.50, Marks & Spencer, Ocado)
A classic representation of northern Portuguese white wine, with a refreshing citrus and tropical flavor profile. This wine has a low alcohol content (10%) and a sugar content of 7g per liter,
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