Today’s post broadens its usual standpoint to look something affecting the prices of the wine we buy – alcohol duty.
Rather than quote and paraphrase a dusty HMRC “Notice”, I have sought the views of someone at the sharp end of the business.
As friends of this site know, Dan Farrell-Wright runs an “Indy” wine merchant in Devon – Wickham Wines.
I often commend his wines – which, in some cases, he sources direct from France himself.
Having also operated outside the wine trade (with websites and in the services), Dan’s view is not a narrow one, and that makes it even more interesting.
He touches on other themes which resonate with MidWeek Wines and its followers.
These include inevitable price rises is “everyday” wines, drinking less but better and (something we return to another day) the alcohol v. heath debate.
Anyhow, that’s enough from me – let’s allow the man to speak for himself.
Dan’s view on alcohol duty
On 1st February 2025 duty on wine changed. What will this change mean when you next buy a bottle?
Historically a bottle of still wine was subject to a single duty band – and until August 2023 this was £2.23, no matter the alcoholic strength, nor the cost of the bottle.
The last government implemented the biggest rise in alcohol duty for 50 years when they increased that to £2.67… Oh how I envy the French, where duty is a mere €0.03.
From February the new government here is going even further.
The duty rate will rise again and will add an additional layer of complication – each half degree change in alcohol will now have its own duty band.
So what the effect be?
Thus, if you enjoy a full-bodied red from somewhere warm, say an Australian Shiraz or an Italian Primitivo, the duty will rise to £3.21.
On top of that comes VAT, new safety and security declarations, and a new packaging tax – the EPR.
Thanks to all these changes inflation on wine is running at more than double the headline rate.
And the results?
You may think this is justified to raise more taxes. If only! Treasury tax receipts show the previous increase reduced the overall tax take – which suggests people reduced their consumption.
Ah! so a reduction in consumption must be beneficial for the nation’s health?
Well, the harm vs benefits of moderate wine consumption are hotly debated and there is no scientific consensus.
No, the government’s stated aim is to help “small craft spirit and wine producers innovate lower-strength products”. This is what economists call nudge theory.
And there’s the problem, this is a policy dreamt up by economists with little understanding of how wine works.
Meanwhile back in the real world
Alcoholic strength is determined by the sun and, thus, in a hot summer grapes have more sugar (and therefore more potential alcohol) than in a cool one.
2022 was hot, in Bordeaux and produced one of the most critically acclaimed vintages of recent years with wines averaging 14% ABV.
2021, on the other hand, was cooler, more difficult, and less impressive, with an average ABV of 13%.
Of course, vignerons could have “innovated” lower alcohol wines in 2022 by picking under-ripe grapes, but the outcome would have reduced that acclaimed quality.
But does reduced alcohol make a difference?
Low and no alcohol wines have been around for a while – apparently in response to market demand.
Tasted blind a compromise is always obvious, they lack something: aroma, flavour, balance, and/or body.
No matter the great claims made by the winemaker, it’s always clear that the Emperor has no new clothes.
Wine has been more popular than grape juice for at least 8000 years for good reasons.
I suspect that the government hopes food scientists can correct the flaws in low alcohol wines with new production methods or additives.
In the same way they have created low fat, low salt, and low sugar foodstuffs but the prospect of Ultra Processed Wine isn’t one that excites me,
And the commercial implications?
All that said, major UK retailers are very price sensitive and – as with shrinkflation – lowering the ABV of wines will allow them to subtly reduce value whilst keeping prices keen.
In the short-term the reduction in quality may be barely perceptible but ultimately chipping away the quality of wine means the consumer will lose out.
Thankfully, Brian (and his dedicated clan of contributors) will continue to taste and critique wines to unearth the best value ones – kissing the (metaphoric) frogs so you don’t have to.
Finding gems for less than £10 is increasingly difficult and thus I suspect that the definition of a “mid-week wine” may need to rise ahead of inflation in 2025.
What about “Indys” like me?
As an independent wine merchant I will not compromise my own quality standards.
I will continue to source sustainable wines from artisan producers made with the minimum amount of intervention.
I trust that the quality will justify the price and if that means drinking fewer, but better, bottles, well, I’ll raise a glass to that.
Thank you, Dan., for a helpful, detailed and entertaining read.
Drop by again on Monday when the spotlight falls on Top Tips that still offer especially good value, but modestly priced, wines – despite, as Dan warns, the expected upward trend in prices
Photo for feature picture by Kelly Sikkema on Unsplash
16 responses
It is, I think, worth noting that the entire change from the previous wide duty bands to very narrow bands is totally the decision and design of the last government. The new government simply deployed it without extending the delays to implementation that the last government had made.
I have always thought the design totally flawed but I would also like to return to an average red wine being 13-ish percent rather than 14-ish percent alcohol.
Hi Nick, it was Rishi Sunak that came up with the plan to change how duty was calculated and Rachel Reeves that implemented it (despite a lot of industry lobbying to prevent it) – so, to my mind, both left and right are as culpable for the change.
As regards red wines going from 13% to 14%, in part that is down to the warming climate. More sun and more heat mean more ripeness and higher alcoholic strength.
Hi Dan,
About half of the rises in alcohol taxes is due to the inflation rate linking,which was based on a 3.5% figure.
If inflation linking is continued it will mean a steady increase in taxes for the foreseeable future.
Agree with you on the supposed health benefits of increased alcohol duty.
The latest survey on the effectiveness of Minimum Alcohol Unit Price in Wales showed no decrease in alcoholics consumption of alcohol and a switch by them to spirits like vodka,away from cider.
Glad you mentioned EPR -the Extended Producer Responsibility Levy on heavy glass bottles,despite glass being the ultimately recyclable material.
From April this will mean another 10p or so tax on wine bottles and a probable shift to plastic packaging.
Which would you rather see a glass bottle bobbing about in the sea or micro plastics ? The obvious answer is neither,but if push came to shove,the glass would be preferable.
Now none of the changes to alcohol duty,inflation linking,EPR levy will help the cost of living crisis- in fact,the exact opposite.
As a regular litter-picker, I loath glass bottles. They are heavy, they shatter and leave fragments everywhere. Supposedly they can be reused but how many are? Cans are so much easier to handle in every way …
Not that I want to buy my wine in them, mind!
Thanks for that Dan, very informative
From my point of view and I drink a lot of wine, I’ve still to taste a low or non-alcoholic wine that I’d be happy to drink, so the increase in duty won’t deter me from buying what I like, but obviously, it will affect some. Don’t get me wrong I’m all for the health benefits, but the wine does taste different and not in a good way. The old saying ‘drink less but drink better’ is perhaps the way to go. Agree about the packaging, those heavy glass bottles are unnecessary.
Also, I don’t use low fat spreads, low sugar drinks etc, but everything in moderation.
Hi Dave,
Good point about heavy glass bottles being unnecessary.I reckon most glass wine bottles could be reduced by a third in weight and to be fair many winemakers are going down that route.
I do very much like Paul Mas wines,but the bottles are often ridiculously heavy and embossed with coats of arms.
But the problem also lies with us ,as we tend to associate quality with heaviness and elaborate heraldry.
Hi Paul,
I have spoken with lots of winemakers about the feasibility of reducing the weight of their glass bottles. The problems they come up against are many.
The first and most obvious is, as you say, our association with quality. For a small producer with a limited marketing budget a heavy bottle is the most cost effective way for them to communicate quality (especially in markets which have less focus on sustainability e.g. China).
The second problem is sourcing lighter bottles – for example, South Africa has only two glass bottle manufacturers (one of which was recently out of action for an extended period), leaving producers with minimal choice.
Finally there are appellation rules which specify the bottle to be used (hence why many French wines have symbols embossed on them). As many Mid Week Wine readers know, at Wickhams we ship lots of Beaujolais Nouveau, it’s a wine intended for fast consumption and thus is an ideal candidate for alternative packaging. However, both the winemakers and Inter-Beaujolais (the regions council) push against the idea as they are worried about a perceived reduction in quality if they adopt PET bottles.
What an interesting article, thank you so much Dan for explaining in such a succinct manner.
In the current edition of Tim Atkin’s “Cork Talk” podcast, he interviews Felicity Carter, an acknowledged expert on health and alcohol policy. She covers the issue of whether pricing has actually reduced alcoholism, the rise of temperance movements, and much more. Well worth a listen.
I can remember the days when a “low” strength implied unripeness and/or poor quality – and chaptalization was allowed, i.e. where sucrose was added to “artificially” (or un-naturally) raise the ABV. Now it is almost the reverse, where for perceived health reasons, to reduce taxation or to retain typicity, some winemakers would like to find ways to reduce the ABV!
I absolutely take Dan’s point that a wine maker wants to make the best quality wine possible for his terroir – which with global warming is changing. And this will undoubtedly lead to increased ABVs. This is good news for, say, Alsace Pinot Noirs, which I remember being thin and green in most years, but lovely in the odd good year! A wine maker who makes great Chablis, even in indifferent years, can be pleased. But a customer who thinks it is more akin, say, to the rich style of a Meursault, may also be very pleased, or perhaps be disappointed by the lack of steely freshness? Or more relevant to me, I struggle when I see a Chiroubles at 15% ABV – it may well be the best wine the maker can make, in the prevailing conditions. But this higher “quality” may well not give me the typicity I was expecting.
But I try not to moan about all this. Change happens, tastes change and new wine drinkers may not like what their parents love! Eventually the market will sort itself out. I can either find a producer that because of his site, or perhaps with changed viticulture manages to make light elegant Chiroubles wines – great, I shall buy them. If no one does, I will look out for this style of wine elsewhere, or perhaps I will get to like the new style? The good news is that the range and quality of wines available, is wider and better than ever before. If you want a good Syrah at no more than 13% ABV, challenge your wine merchant to find you one – I bet he can! It may not be in the Rhone, or he might even suggest a different grape variety and country, confident you might love it. I had never heard of Xinimavro, Assyrtiko, Zweigelt, Mencia or Frappato 5 years ago!
Hi Richard
I’m at Wine Paris next week, would you like me to look out for an elegant Chiroubles at, say, 12.5%?
Hi Dan, thought you might like a challenge, yes, go for it! I’m on your mailing list. 13% would also be OK, I trust your judgement. R
Dan,
Good read!
In General Aviation flight training we face regulations on pilot training and aircraft maintenance devised by the CAA to raise fees for issuing licences and certificates. MS Office documents are devised from behind a computer screen by a Private Monopoly in a quasi-governmental role and given legal status through the Department of Transport.
Net result training moves to Europe and North America.
Increasingly I see “bulk wine” imports which I estimate to be about 50p of wine and £4.50 of tax!
Morning Brian …
Firstly can I say a massive than-you to Dan Farrell-Wright for this fine and comprehensive coverage of every aspect relating to the subject matter and associated implications involved. I just love reading the view of experts to be better informed about my wine appreciation and drinking hobby. And it likely will mean a lot to him in the trade.
Personally I think this duty stuff is a storm in a teacup for individual British consumers though obviously it has quite serious implications for some producers, retailers and importers. Prices are increasing but what’s this mean to individual drinkers?
I can only say both personally and subjectively … and I really must stress this is about my opinion on my own behalf and serves in no way a desire to criticise or influence any other individual, I really have no interest in the increased cost of indulging in my hobby. OK I understand prices are going up but how I personally address affordability to me now is my own responsibility.
I have a budget to which I work when purchasing wines to try. I take Dave Cronin’s position more these days to pay more and drink better and probably reduce alcohol consumption in implementing this process. If this means a rethink on my top buying price that’s what I do.
I am an extremely political animal who recognises the cynicism in relation to product and services pricing, inflation and the addition of TAXES. But as Mark Twain said … there are only two certainties in this life … death and taxes and I won’t let taxation of anything spoil my choices when enjoying life as I see it, certainly not at my age, or being intimidated if I can employ a modification that allows me to continue to do what I’ve done for 60 years.
This of course this might look as a selfish attitude but it’s not. It’s being realistic within my own budget. Those aspects that relate to the ”business of wine production and sales” I have no control over just as I can do nothing more than reduce my car usage when fuel duty increases, again to stay within budget and personal affordability. Other may struggle to do this I understand.
But … sure there could be an issue about what we get in the bottle if the producers start messing with the provenance of what they deliver. Does the rest of the world look at Britain when it comes to supplying wine to us based on this detailed change in tax vis abv?
If Australia think they will need to because we are their biggest market and they will be desperate to retain their market share here I’m sure the Italians and French will change nothing if it compromises the quality of their own products. Why? Because it’s a global economy and Britain is a very small part of wine consumption comparatively speaking. What we do here domestically is less concern for most of the rest of the global trading community. Better look at the stupidity of what might happen with trading tariffs attached to the American model for something that may well have concerns with commerce and massively hiked prices. But again I’ll just choose to stick with not drinking Californian Pinot … I don’t prefer it anyway …
Ask me and I say to the French and Italians … carry on regardless … give me what I like and I’ll pay the extra that the British government loads on its population, but I’ll drink less of it … smaller glasses … reduce daily quantities .. but won’t be dictated to yet anyway at giving up on my passion.
Haven’t even mentioned that there is room for manoeuvre here by the retailers to swallow the increases and just reduce THEIR profitability.
Thank you to you Brian for this excellent MWW article and again to Dan.
Very well said Eddy
Thank you Edwin … but I’m Eddie not Eddy
Thank you Dan for your great stimulus for this discussion Dan.
With regard to the new policy it is quite remarkable how anyone could dream up such a complex and bizarre system of taxation for a single product (wine) and then not respond and make changes based on honest and rational feedback from the industry and consumers once detailed proposals were published. This was going on under both Conservative and Labour majority governments. Of course alcohol misuse is a problem and medical advice about moderating drinking sensible but, if the official purpose is simply “to help small craft spirit and wine producers innovate lower-strength products” sledgehammers and nuts come to mind. Most people have got the message by now and realise the strategy to drink “fewer, but better”, is the way to go. Those graphics that compare the percentage of the wine plus things like packaging, logistics, operating costs etc in relation to duty/tax of a bottle clearly demonstrate this as best value.
In any case, these latest adjustments to alcohol duty are too much too late. Hardly a week goes by now without seeing media reports about increasing numbers of young people consciously drinking less. We are told that one strategy they use is “Zebra striping”, the practice of alternating between alcoholic and non-alcoholic drinks throughout a session. You see Gen Z is already adopting the ‘fewer, but better” model. Good for them. They don’t need the state fiddling with the minutiae of duty. In order to maintain a stable income from the drinks industry perhaps now would be a good time for HMRC to scope equal taxation for soft drinks alongside alcohol?!!