Couple in 20s buying wine Getty 622924262

Source: Getty Images

Booze brands are expected to increase prices as the alcohol duty freeze ends

Most Brits say booze should cost more the stronger it is, but believe increased taxes driving up prices is intended to fill the government’s coffers and not benefit consumers’ health.

Data released ahead of the new alcohol duty system, coming into force this month, showed UK consumers backed higher taxation on stronger alcoholic drinks, but weren’t convinced it would reduce overall alcohol intake [Ipsos Observer Daily Omnibus July 2023].

Over half (53%) of the 2,217 adults polled by Ipsos were convinced government alcohol duty changes were to raise state revenues alone, with 30% saying it would help reduce drinking. Of those surveyed, 22% believed the moves would improve public health and 19% thought it would reduce pressure on the NHS.

The new system hits as the alcohol duty freeze ends, leading to a 10.1% tax rise on all alcohol. Alongside this, the treasury has drastically reduced the number of bands as part of a “radical simplification” of duty calculations, with the overarching principle that stronger abv drinks will face higher rates of tax.

Despite the government’s view that new rules – including the introduction of a new lower draught duty rate – had been made with drinkers’ interests at heart, just 5% of those surveyed said they would benefit personally from the changes. This compared with 60% who said Westminster’s ruling party would be the biggest beneficiary.

Nearly half (44%) of drinkers believe tax changes will lead to the cost of their drinks rising, with just 16% thinking prices would stay the same or lower.

Changes in alcohol duty are also unlikely to prompt widespread changes in consumer behaviour. But bargain hunting may become a bigger factor amongst Britain’s booze-buying public: 46% of 1,973 drinkers surveyed by Ipsos said they would be more likely to wait until their favourite tipples were on promotion before buying.

Alcohol duty reforms are not likely to prompt large changes in consumer behaviour

Drinkers polled by Ipsos were asked: How likely or unlikely are you to do each of the following in response to these alcohol duty changes?

Wait to buy alcohol only when it is on promotion

Switch to cheaper alcoholic drinks brands

Reduce the amount of alcoholic drinks I buy

Reduce spending on other household expenses in order to cover any increase in the cost of alcohol

Around a third (31%) of drinkers said they would look to switch to cheaper brands if prices rose. This was less than the 35% that said they probably wouldn’t trade down, however, suggesting Brits still see alcoholic drinks as an affordable luxury.

Mass-swapping to low & no-alcohol products also appears unlikely: half of those surveyed said they were either very or fairly unlikely to do this, while just 20% indicated they would be more likely to do so. 

Trade bodies that represent the BWS sectors have lined up to criticise the decision to end the alcohol duty freeze as producers and consumers alike battle with spiralling prices. The WSTA said producers will have “no choice” but to pass increases onto consumers.

Not everyone is unhappy, however. This week, Gosnells co-founder Tom Gosnells said changes to the way mead was taxed would help level the playing field between the drink and alternatives like beer and cider.