An international group has been formed to tackle issues experienced in the complex and changeable spirits industry. Brexit, trade wars, counterfeiting and debilitating taxes are just a few of the problems that the World Spirits Alliance (WSA) is looking to address. Comprising spirits companies and trade groups the WSA will represent the industry in front of international organisations such as the World Trade Organization, the World Health Organization and the United Nations. Just last month the UK launched its own Spirits Alliance with the aim of “protecting and nurturing the growth of UK spirits”. Its immediate campaign is to stop any further increase of duty on UK spirits. Currently the government states that spirits duty will go up by the retail price index (RPI) in this year’s Budget. This is extremely disappointing as 65% of the nation’s distillers have reported increased sales of spirits since chancellor Philip Hammond froze spirits duty in the 2018 Autumn Budget. Spirit duty rates in the UK have increased from £21.35 per litre of pure alcohol in 2008 to £28.74 in 2019, the fourth highest rate in Europe and one of the highest rates in the world. The price of a bottle of cognac sold at 40%abv, such as Hermitage 2005, therefore includes £8.05 duty. A spokesperson for the UK Spirits Alliance said: “From Inverness to Penderyn, spirits producers across the country are joining up to back the campaign to fix duty”.
Spirits sales accounted for more tax revenue than beer in 2016, the first time that this has happened. The latest figures from HMRC show that the Treasury took around £3.38 billion from spirit sales compared to £3.32 billion from the sale of beer. This is an increase of 7% over the 2015 figure and it occurred in the year when the Chancellor froze spirit duty, arguably allowing the industry to grow and invest. The UK has the 4th highest spirits duty rates in the EU so the duty increase announced earlier this year in 2017 is a major disappointment. Although the growth in spirits has been gin-led, one top London store told us that they had also seen a significant increase in brown spirit sales, particularly cognac. Other trends reported this quarter show that the UK is leading the European market in online alcohol sales and in the On Trade sector, alcohol sales have risen to over £24Bn despite falling volumes. Consumers are continuing to trade up and look for more premium products like vintage cognac.