The wine and spirit industry has urged the chancellor to rethink the alcohol duty escalator in next week’s Budget, as a market report shows that shoppers are cutting back on wine and spirits.

A report published by the Wines & Spirits Trade Association (WSTA) has said that total volumes of wine sold in the off-trade has fallen 2% over the last year - and that this was largely driven by the year-on-year alcohol tax increases.

The alcohol duty escalator automatically increases tax on alcohol by 2% above inflation.

Volumes sales of spirits fell 1.5% and RTD volumes were also down 9%, with value declining by 3%. Only sparkling wine had grown in volume, up 8% in the last year, the report noted.

The report said that the 3% annual slide in volume alcohol sales was driven by the elevated duty rate, with tax on alcohol increasing by 5% during 2012. It said that by 2015, duty on wine will have increased 50% since 2008, and 44% for spirits.

WSTA chief executive Miles Beale said that falling sales were “a  further sign” that the government needs to think again before increasing prices through the duty escalator, as it risked damaging jobs and growth.  He added that the industry’s hopes for a Christmas boost had failed to materialise, with sales from the last 12 weeks falling 4% from the same period last year.

“This figures show that there was a subdued festive cheer over the Christmas period,” he said.

The news comes days after the government announced it was abandoning its plans for minimum unit pricing on alcohol, because it was likely to affect “responsible drinkers”. 

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