Drinks suppliers have warned that the government's disastrous VAT and duty hike double whammy could lead to a fall in volume sales of up to 5%.
Sales and volumes in both the on and off-trades have already suffered as consumers cut back to save money. The price hikes caused by this two-fold increase would be a further blow for drinks companies, threatening thousands of jobs, and also losing the Chancellor duty revenue.
The worst-case scenario of a 5% collapse in volumes would cost the beer, wine and spirits sector more than £650m in lost sales, according to estimates from The Grocer based on Nielsen sales data.
The lost VAT and duty on these bottles would cost the Treasury £370m in revenue, far outstripping the extra duty raised from the remaining sales.
No-one would gain from a duty hike in the wake of VAT's return to 17.5%, which is why the industry continued this week to rally to The Grocer's call for a duty freeze. "A duty freeze this Christmas would be the right thing for the government to do, for business and for consumers," said Diageo UK head of social responsibility Vicki Nobles.
Others warned of dire consequences if warnings were not heeded. "Every time tax increases further, the entire spirits industry becomes less elastic and able to cope, putting it in a dangerous position," said one whisky supplier.
Tesco backed The Grocer's campaign this week . "I would urge the Chancellor to delay the change until a more sensible date," said corporate affairs director Lucy Neville-Rolfe. "It would help staff enormously if it took place in late January on a Sunday night, after the Christmas and sale periods."
Boots also lent its support. "I'm not sure government appreciates the scale of the problem," said chief executive of Alliance Boots health & beauty division Alex Gourlay. "Its not fair on customers or staff."
Sales and volumes in both the on and off-trades have already suffered as consumers cut back to save money. The price hikes caused by this two-fold increase would be a further blow for drinks companies, threatening thousands of jobs, and also losing the Chancellor duty revenue.
The worst-case scenario of a 5% collapse in volumes would cost the beer, wine and spirits sector more than £650m in lost sales, according to estimates from The Grocer based on Nielsen sales data.
The lost VAT and duty on these bottles would cost the Treasury £370m in revenue, far outstripping the extra duty raised from the remaining sales.
No-one would gain from a duty hike in the wake of VAT's return to 17.5%, which is why the industry continued this week to rally to The Grocer's call for a duty freeze. "A duty freeze this Christmas would be the right thing for the government to do, for business and for consumers," said Diageo UK head of social responsibility Vicki Nobles.
Others warned of dire consequences if warnings were not heeded. "Every time tax increases further, the entire spirits industry becomes less elastic and able to cope, putting it in a dangerous position," said one whisky supplier.
Tesco backed The Grocer's campaign this week . "I would urge the Chancellor to delay the change until a more sensible date," said corporate affairs director Lucy Neville-Rolfe. "It would help staff enormously if it took place in late January on a Sunday night, after the Christmas and sale periods."
Boots also lent its support. "I'm not sure government appreciates the scale of the problem," said chief executive of Alliance Boots health & beauty division Alex Gourlay. "Its not fair on customers or staff."
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