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Home » South West Hospitality Sector Warns Of Confusion Over New Changes To Alcohol Duty

South West Hospitality Sector Warns Of Confusion Over New Changes To Alcohol Duty

South West hospitality firms have been reacting to the Government’s changes to alcohol duty, which came into force on Tuesday (August 1), labelling them as “confusing” and “a huge blow to the industry”.

The changes will see alcohol being taxed on volume rather than type of drink, which means that while some prices will soar others will decrease.

The new duty was set out in the Chancellor’s Spring Budget, which said that 38,000 UK pubs and bars would see a tax cut on pints pulled.

Jeremy Hunt, Chancellor of the Exchequer said: “The changes we’re making to the way we tax alcohol catapults us into the 21st century, reflecting the popularity of low alcohol drinks and boosting growth in the sector by supporting small producers financially.”

Coined ‘The Brexit Pubs Guarantee’ in the Chancellor’s Spring Budget, the duty paid on drinks on tap in pubs will be up to 11p, lower than at the supermarket. These changes are designed to help the sector compete on a “level playing field” with supermarkets and always pay less alcohol duty than the retailers going forward.

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However, the hospitality sector remains unconvinced. The changes will see duty rise by 44p on a bottle of wine, which when combined with VAT will mean consumers will pay an extra 53p, according to the Wine and Spirit Trade Association (WSTA).

Meanwhile, the total tax on a bottle of gin or vodka will go up by around 90p.

This change, the Government revealed, affects 4,095 pubs and bars in the South West.

Laura Clerehugh, head of hospitality at Fives Cyderhouse, Falmouth, told BusinessLive : “In the current economic climate, where households budgets are tighter than ever – this alcohol duty increase, which is as high as 44% on some drinks is another huge blow to the whole industry and our loyal customers.

“Over the past few years, hospitality in general has suffered enormously. Staffing since COVID has proved challenging, energy costs have spiralled, food costs are crazy and less people have the disposable income to treat themselves to that after work pint or family meal on the weekend. It has been really, really tough and whilst the Government has tried to sugar coat the duty reform as a fairer and more simple system for taxing alcohol, the bottom line is that they have hiked up alcohol duty tax to the point that a pint of cider, a bottle of wine, a shot of port or a vodka and tonic will cost the customer up to £1.30 more than it did on the 31st of July.

Ms Clerehugh added: “The most frustrating part of the alcohol duty increase is that our customers don’t fully understand why prices are going up, so pub owners, managers and employees are being left to educate the general public, respond to reviews from irritated customers and do our best to mitigate these price increases – it’s not fair. It does make you wonder when it will end as it is one price rise after another at the moment.”

The new method being introduced by the Government will see drinks taxed by strength for the first time and a new relief – named Small Producer Relief – to help small businesses and start-ups create new drinks, innovate and grow.

Mike Downs, landlord of The Volunteer Inn in Ottery St Mary said: “It’s a bit of a weird one isn’t it? Some duty is up, some duty is down. So where we’re gaining on one side, on the other we’re losing.

“And it’s confusing. With the cider we sell, Devon Scrumpy is 6.5% ABV so the tax has gone up. Then there are ciders containing fruit other than apples, which are currently classed as wines, so the tax on Fanny’s Bramble which has an ABV of 4% has gone down. Many of the breweries have already introduced lower ABV beers to save on duty.

“I think it’s something of a token gesture by the government to bring supermarkets in line with pubs, to make them look like they’re doing the right thing. Perhaps it’s to do with chasing votes for the future election – but it’s never going to work for the industry until they set a totally fair tax.

“In all honesty, this is not going to make a blind bit of difference to us. We’ve just had a record-breaking July, and I’ve no doubt our customers will just go with the flow.”

While Howard Davies, co-founder and director of Salcombe Distilling Co. added: “The duty increase presents businesses in the drinks industry with the difficult decision of either passing on the impact of the duty increase to customers (both trade and end consumer) or absorbing the impact of this cost themselves and thus reducing (often already slim) margins.

Mr Davies told BusinessLive: “At Salcombe Distilling Company, after much consideration, we have decided not to increase our prices on this occasion. We believe both trade and consumers alike, already have enough challenges with the cost of living increases and inflation. It would be great if there is not another duty increase for a few years to allow our entire industry, including producers, distributors, retailers and bars, a chance to thrive!”

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