Wine club membership fees will soar because of tax rises if Rishi Sunak presses ahead with post-Brexit reforms to alcohol duty, industry leaders warned on Friday.
Major wine subscription firms said they would have to pass on the price hike to consumers facing the cost-of-living crisis, and urged the Chancellor to reconsider his plans.
Wine will be taxed on its alcoholic strength, rather than by volume, from February 1 next year as part of reforms after the UK left the European Union.
Virgin Wines UK said the price of some subscriptions would rise by as much as £15.20 a year because duties would increase on almost all wines. Their Discovery Club cases will go up, on average, by £3.80 per case of 12 bottles.
“The Government’s proposals will inevitably lead to higher prices for wine drinkers across the UK,” said Philippa Strub, managing director of Laithwaites, which has 200,000 wine club members.
“The new duty system alone could increase the price of a 12-bottle case of wine by 5 per cent, notwithstanding other global inflationary pressures.”
Duty will increase on 70 per cent of all wines and sparkling wines, 80 per cent of all still wines, 95 per cent of all red wines and all fortified wines.
‘Consumers will once again be left to bear the heavy burden’
Jay Wright, the chief executive of Virgin Wines UK, said: “No business will be able to absorb these significant duty increases and as such the UK consumer will once again be left to bear the heavy burden of this substantial tax rise.”
The Government argues the current system incentivises producers to make stronger drinks because all wines and ciders face the same flat rate.
The current three bands of taxation will be replaced with 27 different rates based on 0.5 per cent increments of alcohol by volume (ABV).
The Wine and Spirit Trade Association said additional staff would be needed to deal with the new red tape, which will hit vineyards, retail, bottling plants and SMEs.
The industry is already suffering from the disruption to supply chains and energy prices caused by the war in Ukraine.
A Treasury spokesperson said: “Our reforms will replace our outdated rules with a common-sense approach that puts the taxation of stronger beers, wines and spirits on an equal footing, making lighter and sparkling wines more affordable for UK drinkers.
“This comes on top of freezes to alcohol duty at the last three budgets, saving consumers £5.7 billion in total.”
Sparkling wine will benefit from a tax reduction of 25 per cent to the level of still wines, which will mean a typical bottle of prosecco is 87p cheaper.
This should benefit the growing British sparkling wine sector, but many of the most popular foreign wines will be hard hit.
Wines made in warmer countries such as Australia, South Africa, Chile and California are stronger because grapes there produce more sugar, which turns into alcohol during fermentation.
93% of Australian wines will cost 58p more per bottle
In total 93 per cent of Australian wines, such as 19 Crimes or Yellow Tail Shiraz, will cost up to 58p a bottle more, according to industry estimates.
ABV can vary from harvest to harvest by as much as 1.5 per cent, which means the duty payable could fluctuate from vintage to vintage by 30p a bottle.
Still wines currently have a flat rate of £2.23 per bottle.
With 70 per cent of wines sold between 12 and 15 per cent ABV, the new duties will range from £2.33 to £2.91 per bottle. VAT is added on top.
Red wines with 13 per cent ABV will go up 35p, while 12 per cent bottles will go up 12p and 14 per cent by up to 58p.
White wines with an ABV of 13 per cent, will go up by 35p a bottle, according to the Wine and Spirit Trade Association.
The group warned in February that the tax rise could cost drinkers up to an additional £300 million a year and wipe out the roughly £70 million saved by scrapping EU red tape on wine imports after Brexit.