Whisky slump prompts budget action plea

By Michael Stones

- Last updated on GMT

Sinking drinking: Scotch and beer consumption both fell last year
Sinking drinking: Scotch and beer consumption both fell last year

Related tags Scotch whisky Whisky

The Scotch Whisky Association (SWA) is urging chancellor George Osborne to cut duty by 2% in his March 18 budget, after it emerged the UK Scotch market fell by nearly 5% last year.

The number of 70cl bottles of Scotch released for sale in the UK last year fell by 4.78% to 83.3M from 87.5M in 2013, according to SWA research.

The UK market for Scotch has shrunk by 9.5% from 92M bottles over the past five years, confirmed Her Majesty’s Revenue and Customs (HMRC).

The slump was further evidence that the onerous level of taxation of 78% as a share of the price of an average bottle of Scotch was damaging the industry’s key contribution to the economy, the SWA claimed.

The Scotch whisky industry adds £5bn to the UK each year and supports more than 40,000 jobs, it said. SWA chief executive David Frost said Scotch whisky was a massive export success and it was disappointing to see falling domestic sales.

Supports more than 40,000 jobs

“In next week’s budget, the chancellor has the perfect opportunity to support an important UK industry,”​ said Frost. “He should cut spirits duty by 2%. This move would also benefit consumers and public finances. In last year’s budget, the chancellor highlighted Scotch whisky as a ‘huge British success story’. We hope this year too he will show his support for this world-class manufacturing industry.”

Last year the chancellor scrapped the alcohol duty escalator was scrapped and froze the duty on spirits.

Duty on Scotch has been cut only three times in the past century. Two out of three people in the UK are unaware they pay almost 80% of tax as a share of the price of an average bottle of Scotch, said the SWA.

Sinking drinking

  • UK Scotch market fell by nearly 5% last year
  • Scotch market sank by 9.5% over the past five years
  • Scotch exports sank by 11% to £1.77bn in first half of 2014
  • Alcohol consumption dropped 0.3% last year 

Pay almost 80% of tax

British drinkers contribute 25% of all excise duty paid on spirits in the EU. French and German consumers pay 15% and 14% of total EU spirits taxes respectively. Spanish consumers pay only 5% of spirits tax revenues.

The SWA said 84% of Britons described the duty as unfair, when they learned of its full extent.

Scotch whisky exports sank​ by 11% to £1.77bn in the first half of last year.

Meanwhile, UK alcohol consumption per head fell by 0.3% last year, supporting the “overwhelming”​ case for beer duty cut, claimed the British Beer and Pub Association (BBPA).

But beer’s share of the market rose by 1% to more than 36% – with second-placed wine slipping below 33%.

Alcohol consumption per head was 18.4% lower than it was in 2004, when the current, falling trend began, according to BBPA figures based on HMRC alcohol tax returns.

BBPA chief executive Bridget Simmonds said the statistics buried the myth that overall UK alcohol consumption is inexorably rising. “There is no doubt that two cuts in beer duty have had a huge impact in supporting a British-based industry and in encouraging consumers back towards our favourite, lower-strength drink,”​ said Simmonds.

“With new investment in the beer category protecting pubs and creating jobs, it all adds to an overwhelming case for a third, historic cut in beer duty in the budget on March 18.”

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