Drinks industry cautious on UK budget

By staff reporter

- Last updated on GMT

Related tags: Alcoholic beverage, Uk

The UK government's budget for 2006 was greeted with a mixture of
praise and stern criticism by the drinks industry, as some felt the
Chancellor had ignored important measures.

Drinks industry highlights of Wednesday's UK budget announcement were a duty freeze on all spirits, sparkling wine and cider, with tax rising an extra 4p and 1p on bottles of wine and pints of beer respectively.

Both the Gin and Vodka Association and the Wine & Spirit Trade Association (WSTA) welcomed the freeze on duty for spirit drinks. Both have argued for months that drinks makers already pay high taxes and were struggling against rising input costs.

The WSTA also praised government chancellor Gordon Brown's plan to dump or simplify 24 regulations covering the production and sale of alcoholic drinks. The association said the move would reduce unnecessary costs for businesses.

There was, however, also a growing sense of missed opportunity among drinks industry associations over duty tax on certain products.

The WSTA had wanted the government to eliminate the 36 pence surcharge currently paid per bottle of sparkling wine in the UK.

And, the group said it was very disappointed by the duty rise on wine "at a time when there are strong indications that the rate of wine market growth is slowing"​.

UK wine consumption has risen by around 75 per cent in the last 15 years, helping the sector to kick its stuffy image and begin to seriously rival beer.

The British Beer and Pub Association (BBPA) was more forthright in its criticism of the new UK budget, warning a clear strategy for beer duty was badly needed.

"Instability, uncertainty and pressures on the sector have cost 1,000 jobs in the brewing industry over the last 12 months,"​ said spokesperson Mark Hastings.

He accused the Treasury of favouring imported wine over British beer, citing that beer duty had risen 22 per cent since 1997 and was now taxed more than wine in relative terms.

"The Government's unequal treatment of the beer and wine taxes is now costing the Treasury an estimated £200 million a year,"​ Hastings said.

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