Duty cuts last year benefited consumers and helped stem volume decline, WSTA claims

Arabella Mileham

Miles Beale

Last year’s duty cuts have benefited consumers and helped halt volume sales declines, the latest research from the WSTA has found.

Data compiled for the WSTA’s market report showed alcohol prices across the off-trade had slowed to less than half of last year’s rises, and average beer prices had declined by 1% after two successive beer duty cuts.

Wine and spirits, which last year saw a duty rise in line with inflation and a freeze respectively, grew by just 2%. This was less than half the annual growth rate seen in the previous two years, the WSTA said, and the lowest increases it has seen since beginning its market reports five years ago.

It said this showed the lower duty rates had been passed onto consumers, news that would be welcomed in the light of the Chancellors recent Budget announcement which saw a 2% duty cut on beer, spirits and cider and a freeze on wine duty.

Miles Beale said the rates of price increase in the off trade were the lowest the WSTA has seen for some years. “Whereas average prices for wine and spirits have been increasing by about 4% or 5% every year due to the Escalator, what’s surprising is how quickly its abolition has fed through to help prices grow much more slowly,” he said.

“It is welcome news for consumers that the Government’s decision to scrap the Alcohol Duty Escalator and take the first steps towards rebalancing the duty regime is being passed on.

“But what’s most exciting is that these results mean that 2015 Budget measures announced by Government last week should see price increases slowing further.”

“It’s also great news for our members and the wider hospitality trade that the Government has recognised the benefits of a more stable and supportive tax environment.”

“The Chancellor can therefore have confidence that and wine and spirit businesses are prepared to pass on that benefit to consumers.

However, the resport noted alcohol prices were still higher than other food prices due to the high percentage of tax on a bottle of spirits, at 80% and wine, at 60%. Although sparkling wine’s had continued to grow, still wine volumes declined for the fifth straight year in both the on- and off-trade.

In February, the WSTA’s Call Time On Duty campaign, which helped see the end of the duty escalator on wine and spirits last year, won the Best PR Campaign category at the Association Excellence Awards.

 

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