From 1^st August 2023 there will be changes to alcohol duty following the UK’s Spring Budget announcement in March 2023. Draught products will have additional support, however duty on other alcohol products will rise with inflation. These challenges will impact undoubtably impact the hospitality sector, however our expert team have all you need to know, along with savvy tips, to help you beat the blues.

According to Wine and Spirit Trade Association (WSTA), the predicated rate of inflation is approximately 10.1%. It is expected that other drinks products higher the alcohol per volume (ABV), will have a higher duty rate.

ABV will impact Duty Changes

From 1st August all alcohol products will be measured by alcohol volume or ABV.

Some relief for beer and cider

Draught beer and cider in 20-liter kegs with an alcohol content below 8.5% are eligible for a 9.2% discount - however this discount only applies when using a dispense system – meaning a 50-liter keg of 4% ABV remains unaffected by duty changes.

Packaged beer with an alcohol content of 3.5%+ ABV will experience a 10.1% increase in the standard duty rate. As a result, the price of a 24-pack of 330ml 4.5% lager will go up by £0.69p per case.

How will wine be affected?

Most wines will see an approximate increase of £0.44 per 75cl bottle or a 20% increase in duty paid (from £2.23 to £2.67). This change applies to wines with an 11.5% and 14.5% ABV.

For wines with an ABV 15%+, the duty increase will be more significant at £0.97 (+44%) per 75cl bottle, and this increase will scale higher with higher alcohol percentages. For fortified wines with an ABV of +20%, the duty will go up by £1.30, reaching £4.28 per 75cl bottle.

However, wines with an ABV under 11.5% will receive more favourable treatment. For instance, wine with a 10% ABV will have a duty rate £0.09 lower than the current rate, at £2.14 per 75cl bottle.

Additionally, as of August 1st, there will no longer be separate duty rates between sparkling and still wines, i.e., a bottle of Champagne or sparkling wine reduce by £0.19, aligning it with still wines at £2.67 per 75cl bottle.

All you need to know about duty on spirits

The duty rates for Spirits with 22%+ ABV will see a 10.1% increase, in line with the Retail Price Index (RPI). As a result, the cost of a standard 40% ABV bottle will rise by £0.81 per bottle. However, for products with ABV below 22% and less than 3.5%, can expect a reduction in duty compared to current rates.

The WSTA has provided a comprehensive overview of the duty changes across the category. For further details, you can visit their website or refer to the policy paper released by the UK Government.

Duty Change Overview

Source: WTSA 

How does this affect you?

With these adjustments, we anticipate shifts in drinking habit. Despite the cost-of-living crisis, hospitality venues continue to be a significant aspect of consumers' spending habits.

PROOF found that during March to May 2023, 26% of consumers visited bars, pubs, or restaurants at least once a week, with CGA reporting that on-premise drinks sales were 7% higher compared with June 2022.

PROOF Insights predict that 27% of respondents indicated that they still plan to go out at least once a week during the latter half of 2023. Although inflation continues to increase - we are confident that positive consumer behavioural trends will impact in the hospitality industry favourably in the long-term.

Consumers may be reducing their alcohol intake but are willing to splurge a bit more on higher-quality drinks when they do venture out. This is an opportunity to push premium drink offerings through menu features, staff recommendations, catering to special occasions and create unique servings.

Get in touch with your Tennent’s Direct account manager or contact us via email if you have any concerns or questions about duty increases.