It was only a few weeks ago that the British Retail Consortium, UKHospitality and others wrote to the government with a request to freeze business rates. And with the release of the autumn statement, it’s clear the Chancellor has paid attention – at least to some degree. But I stand firm that despite these small concessions, this is a government that simply doesn’t understand UK retail and the spirits industry.
August this year marked the largest rise in alcohol duty this country has seen in almost 50 years. And to think we’ll be grateful for a 12-month freeze is absurd – the August hike was a direct attack on the spirits industry. But this attack affects retailers too, especially when combined with increasing wage costs (National Insurance was only reduced for employees, according to the statement), inflation, and the pressures of winter fuel costs.
The average price of a bottle of gin, as of September 2023, was £17.01 – almost 10% up on last year. And that was calculated before the true effects of the August duty hike had an impact. If that bottle of gin is 40% abv, of that £17.01, £10.62 is paid to government in duty and VAT, leaving behind a meagre amount to be split between every party in the supply chain, after production costs are deducted of course.
But do consumers realise this? When they buy their favourite bottle and the price is up by a few quid, do they think “those bloody duty rises”? Of course, they don’t. They blame the retailer. How dare you increase your prices; and cries of corporate greed are heard, alongside the government’s carefully worded plea to retailers to keep prices down to help combat inflation.
Solve spirit industry problems
It’s contradictory at best and shifting the blame at worst. Beyond that, it’s going to reduce the selection of spirits available on the supermarket shelf. In such a hostile tax environment, the great British independent producers are going to face financial pressure, and I predict many will go under. Trying to keep that shelf stocked with interesting brands, and new brands, will undoubtedly become more of a challenge.
So, what would be a solution? For spirits, retail, and hospitality, I think we’d all ask to be left alone for a while. In the spirits industry, the barriers to success are now so high that a lot of independent businesses simply won’t make it. And the unintended result is a concentration of conglomerates, less choice, and less competition.
And if the government is still intent on making it difficult for us to do business – appease us with funding and support for issues that really affect us. Put some of that money back into solving our problems.
For retail, that would be support in tackling the shoplifting epidemic that’s hitting the UK. In September, the Co-op announced it was experiencing a staggering average of 1,000 cases of antisocial behaviour or shoplifting per day across its stores nationwide. Did August’s alcohol duty rise increase the incidence of shoplifting? I’d say it’s likely that it did.
The future is bleak for independent businesses
I am pleased to see the ‘wins’ announced in the autumn statement for hospitality – even though the rate reliefs won’t apply to the whole industry. It’s about time they listened, learned, and saved a sector that could transform the British economy.
But those of us in the spirits industry still firmly believe that this government is intent on punishing us – with the best ‘support’ we can hope for being a measly 12-month freeze in duties.
So, in advance of the spring budget, we will continue to petition, lobby, and shout about the damage that’s being done. Not only for our benefit – but for the benefit of UK retail, hospitality, and the choice they offer the consumer.
If change doesn’t come, the future is bleak for independent businesses and the supermarket booze shelf is likely to become a very boring place indeed.