The boss of Stella, Beck's and Budweiser owner AB InBev is warning the price of booze could jump up to 10% next year because of government tax hikes.

Stuart MacFarlane, president of AB InBev UK, joined The Grocer as guest editor this week and used the occasion to launch a blistering attack on government intervention in the drinks industry.

He predicted BWS shelf prices would rise by as much as 10% next year, adding further misery to the category, with lager volumes particularly hit, slipping 1.4% to £1.6bn [Nielsen MAT 3 October 2009]. The vast majority of any price rises would not come from suppliers or retailers but from "government meddling", he said.

As well as a 2.5% VAT hike from January, alcohol duty rises set to kick in from April will include a net increase of 2%, to which inflation, estimated at 1.7%, will be added, causing a 6.5% hike across BWS, "even before increased retailer and supplier costs are factored in. There could also be a further increase in the pre-budget report [on 9 December]. And if the Tories get in, a new budget and higher VAT could see prices rise up to 10%."

Beer prices had already risen 5.8% in the past 12 months, he said, as a result of the 8% increase in alcohol duty last December. "The government is hindering a sustainable and profitable beer industry. I have gone from being concerned to angry."

Duty and excise increases were not solving any issues, he added. "The government's thinking is not joined up. Are we policing underage drinking on the streets enough? No. It should better enforce laws already in place."

At the British Beer & Pub Association, Mark Hastings echoed MacFarlane's warning. "An even heavier tax burden when money is tight will undoubtedly impact on people's spending."

Leading figures from the wine industry supported MacFarlane's views. "Every other industry has received support from government, but alcohol seems to have been punished," said Jeremy Beadles, Wine and Spirit Trade Association CEO. With several wine suppliers either closing in the past year, or announcing redundancies, "taxes are jeopardising the industry's future".

John Hearn, commercial director of Blossom Hill supplier Percy Fox, said: "With margins wafer thin, we can't absorb increases due to VAT, duty and exchange rates, so we are going to have to pass them on next year."

The boss of a leading wine supplier added: "The country is billions in debt there's no way that taxes on alcohol will come down in the short term."

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Editor's Comment: Government has more tools in its arsenal than imposing more duty (21 November 2009)