Brexit price rise could take fizz out of champagne sales, warns industry body

Brexit, a weak pound and rising inflation could take the fizz out of prosecco and champagne sales as prices rise, the industry's trade body warned on Tuesday.

The Wine and Spirit Trade Association (WSTA) said the “triple whammy” could be “devastating” for the sector this year with champagne and sparkling wine prices set to leap by £1 and 59p a bottle respectively.

It was also concerned that more duty hikes could be on the way when Chancellor of the Exchequer Phillip Hammond delivers his first Budget next month. The WSTA wants him to implement a 2% cut.

UK duty on a bottle of still wine in the UK is £2.08, meaning that 55% of the average-priced bottle goes on duty and VAT. However, this rises to 28% for sparkling wine, the WSTA said.

As couples prepare to pop corks across Britain on Valentine's Day, few would be aware as they gaze at each other across the candle-lit table that they are pouring £2.67 in duty into Treasury coffers.

French couples, however, will be handing over a mere 6p a bottle in duty, the WSTA said, adding that they only pay 3p on a bottle of still wine compared with the £2.08 levied by the UK government.

“The average drinker in the UK pays around £206 in alcohol duty per year. If Britain enjoyed the same duty rates as France this could drop dramatically to £52,” it said.

“The UK alcohol industry is one of the most heavily taxed in Europe with UK wine drinkers paying 68.4% of all wine duties collected by all 28 EU member states, despite accounting for only 11% of the population.”

A YouGov survey conducted for the WSTA revealed that 60% of people underestimated the amount of tax they pay on wine. Once they found out the tax levels 62% thought it was too high and 21% believed it was about the right amount

WSTA chief executive Miles Beale said further duty rises could make it a” triple whammy for consumers who are already paying a staggering amount of wine and spirit duty”.

“Wine was the only product singled out for inflationary rises in the UK’s 2016 Budget and the year before in 2015 it was the only product not to receive a 2% cut. Worse still, duty is 30% higher on sparkling than still, which means lovers’ sparkles are hardest hit – including the majority of our increasingly well regarded home grown English wine,” he said.

Brits bought more than 131m bottles of fizz in 2016 from UK shops and supermarkets, a 13% increase on 2015, the WSTA said.