WSTA calls for cut in drinks duty

19 December, 2014

The Wine and Spirit Trade Association, the lead body for the UK wine and spirits industry, is calling the British government to cut the duty on all alcoholic drinks.

A report commissioned by the WSTA, which draws on data from leading independent sources Nielsen and CGA Strategy, while the consumer research is based on YouGov and WSTA analysis, says there is a need for a 2% cut in duty for pubs and restaurants.

It claims that while there’s a return to volume growth in the off-trade - pubs, bars and restaurants will be hoping for a merrier festive season, as sales fell 3% in the latest 12 months.

The final quarterly report of the year follows the launch of the ‘Drop the Duty! campaign which is calling for a 2% cut in alcohol duty to help support Britain’s pub sector.

The WSTA says economic analysis from EY shows a modest 2% cut in duty for wine and spirits would boost the public finances by £1.5 billion and enable the hospitality sector, where wine and spirits are worth £10bn, to boost its sales and employment.

In the off-trade, annual sales returned to 1% volume growth, largely on the back of a 2% increase in beer sales and a 1% increase in spirits sales, however wine sales were down -3%. In the on trade, sales of wine, spirits, and beer were all down over the short and long term, although there was some positive annual value growth, suggesting consumers may be going out less but treating themselves when they do, says the association.

The reports says:

On trade:

- Spirits sales were down again this quarter, down -5%. Vodka and whisk(e)y sales both declined by -7% in the last 12 weeks, although gin bucked the trend in double digit volume and value growth.

- Wine sales fell -4% this quarter with sales from most of the top 10 countries in decline. France and New Zealand wines were the exception with both enjoying positive volume growth, New Zealand wine was the standout country performer, up 16%, after struggling for some time.

- Sparkling wine continues its rapid growth, up 15% over the year, although it slipped into single figures in the latest 12 weeks. Perhaps most tellingly is the rise in Champagne, up 9% in the quarter and 4% over the year, a sign that consumer confidence may at long last be returning?

Off trade:

- Spirits were the strongest performing of the major categories with sales up 3% in the latest 12 weeks, led by an 11% increase in liqueurs.

- It was another tough quarter for wine, as sales declined by -3%. Old World wines in particular continued to struggle with sales of French, Italian, German, and Spanish wines all in long-term volume and value decline.

- Sparkling wine was the one bright spot as it continues its remarkable growth, up by +29% in the last 12 weeks and 17% for the year.

Consumer polling:

- Red wine (31%), white wine (28%), and beer (25%) remain consumers preferred drink choice at home over the last month.

- Out of a total of 3,913 selections for drink choices at home, 60% of these were wine and spirits.

WSTA chief executive Miles Beale said: “The latest market report suggests it has been another mixed trading period for the sector. The fall in on-trade sales will be of concern for restaurants, bars and pubs - which are increasingly reliant on wine and spirit sales.

If the Chancellor is serious about helping the hospitality sector, then the time has come to drop the duty, not just on beer again, but on wine and spirits too,” said Beale

The WSTA represents more than 340 companies producing, importing, transporting and selling wines and spirits. It desctibes itself as working with its members to promote the responsible production, marketing and sale of alcohol.

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