The Chancellor’s announcement of an additional 4p duty on a bottle of wine in Wednesday’s Budget report will have a direct effect on the consumer’s pocket and will break the current price points on wine, according to key industry figures.
With the pricing of wines traditionally set at 1p below the pound, they questioned whether the consumer would accept bottles priced at 3p over the pound, at £5.03 instead of £4.99, for example.
Liz Aked, Spar’s cigarettes and alcohol buyer, said: “I think it will critically crack the price points as the suppliers can no longer take the strain and retailers have tight margins.”
Allied Domecq strongly urged retailers to pass duty increases on to consumers, while the Wine and Spirit Association said it thought the rise would not stick, though as a result producers may have to reduce quality. The convenience retailing industry expressed concern that the hike, plus 1p on a pint of beer and 7p on a packet of cigarettes, could mean more money going to the black market.
“The Chancellor is continuing to make bootleggers the supplier of choice,” said James Lowman of the Association of Convenience Stores.
The Chancellor also said he would get rid of the stamp duty exemption in disadvantaged areas, so any acquisition by the industry in such areas would be subject to land tax.
But Gordon Brown did promise to reduce the amount of red tape UK businesses have to put up with a reduction in number of regulatory agencies from 35 to nine.