TNWG Wine Times: Ep 37: What do the tax changes on alcohol mean for the consumer ?
- aplofthouse
- Mar 25
- 8 min read
I'm going to do my best to not sound too 'ranty' in this episode...it will no doubt be hard with the hard truths coming up for all, BUT let's start with some fun and the events that are coming up in the calendar....
UPCOMING EVENTS
1) The ARRIVAL of The Wine and Cheese Network in Sheffield - which is now COMPLETELY SOLD OUT for the month of January.
So here is your chance to get ahead of the game and grab your tickets for FEBRUARY - and for this second month, despite the tax changes, I am holding the price for you all (note it will likely move up to £30 from March - because of the added costs from suppliers (see duty laws below) BUT may well have a Charitable Link - watch this space!)
👉 📅 CHECK YOUR DIARIES!!!
When: Thursday 27th February
Time: 6pm till 8pm
Location: Yard Gallery, Leah's Yard, Sheffield City Centre S1 4HP
🍷🧀🧑🤝🧑 Wine, Cheese and Networking....do you need anything else?
2) MANCHESTER / SALFORD - Are You Ready?
We are coming over to Manchester too - with the creation of The Manchester Wine Club:
😲 ONE WEEK TO GO !!!!
A fun filled way of getting rid of those January Blues! Enjoy a wine tasting session at the ALL NEW Manchester Wine Club held in Kargo MKT at the Media City.
Outside of that, this week there was a lot of fun had Judging in the People's Choice Drinks Awards for the THIRD year running on the Judging Panel.
This year it led me to be the Table Lead for the Spirits Awards and here is the stellar judging table:
One of the great things about the People's Choice Drinks Awards, is that it is about the consumer. So the judging panel consists of wine and drinks professionals, plus the enthusiastic consumer too. A real tip of the hat to not only understanding exceptional wines in their classes but also from a consumer led point of view. Great to be there and a super way to spend an evening in the WSET School London headquarters.
Not done with Judging, it has also been a very important start to the year for Burgundy, as it is time for the En Primeur 2023 Release. So I trudged off over to Liberty Wines Ltd to taste an incredible array of Burgundy and Beaujolais 2023s. And boy are you in for a treat! There are some exceptional wines coming to the market, so keep your eyes peeled and keep an eye on my socials for further information on the Liberty tastings and some highlights!
NEW 📚 DRINKS EDUCATION ZONE 📚
Did You Know......?
Not Every Wine Will Improve with Age.....in fact the majority do NOT!
In fact, a large majority of wines are made to be consumed as soon as they are on the shelves available to the consumer. Wines which are high in acidity, high in tannin typically have the structure able to age, such as the Bordeaux Cabernet Sauvignon based blends. However, a large majority of the wines you are buying on a daily or weekly basis for consuming will not improve with age!
The wine producer has created them in a style that is to be drunk young. So just because a wine may have a vintage (year) which is some time ago, does not mean it is a 'classic' or it is going to taste amazing. It really does depend on the winemaker style and how they have created it.
And now back to the rant......
The New Alcohol Duty System
So if you are a little over the top and really want to dig into the detail (yes.....like me) then you can read the full manuscript from Parliament here in full PDF format.
It is exceptionally messy and confusing, so let me try to make it as clear as...... MUD.
Alcohol duty is a tax charged at the point of which 'the production or importation of drinks of alcoholic strength exceed 1.2% in alcohol'. What is even more annoying is that the duty different for beers, ciders, perriers, wines and spirits! VAT is then also charged on the duty included price - double tax anyone?
The great news.....for the government, not you, is that this duty tax will increase government revenues from £12.6bn in 23/24 to a whopping £16.1bn in 28/29. 😲
Breathe...no rant....breathe...
Now, the government were very quick indeed to announce the highlights of the budget given in Autumn 2024 as a '1p cut on alcohol duty for draught products'. Great - so less spent at the pub then.....well not quite....
Despite increasing pressure from the whole of one of the largest agricultural industries in the UK - the wine industry - the government decided to put up tax on non-draught products.
So very simply - from the 1st Feb this year (2025) wine duty will rise by 3.65% and that the temporary duty 'easement' of wines that had ABVs of 11.5% to 14.5% will come to an end.
💰 What does this mean in monetary terms? 💰
Good question. It means that the wines that were within the 11.5% to 14.5% range (around 85% of all UK wine sales) were held at £2.67 per bottle. This is no longer the case. In fact each 0.1% difference will now have its own distinct duty rate! Not surprisingly, the more alcohol a wine has, the higher the rate of duty added.
PLUS.....yes there is MORE.....
The duty rates will not only change in accordance to their ABV but will also increase in line with the RPI inflation rate (3.65%)!
So, this means for example, a red wine that has 12.5% ABV will have a duty rate of £2.77 instead of £2.67 per bottle, if you get to 14.5% ABV it will move from £2.67 per bottle to now £3.10 per bottle! OUCH!
If you want a full table based on all ABV levels I can provide on request! (Told you, a little bit of a geek!).
Conclusion
Wine and spirits are going to have more taxation overall than they did before, starting on the 1st February. Therefore, all suppliers will increase their prices to reflect this and you as consumers will be expected to pay more for the same bottle too.
So the hot tip from me, is speak to the likes of myself (The Northern Wine Guy) on getting in wine ahead of the 1st February before the taxation levels come into effect on delivery of wines at these current levels. It will not remain at these levels for long! 😭😭
Moving on....as I never like to finish on a bad note....
🗞️ LATEST DRINKS INDUSTRY ARTICLES 🗞️
TOP ARTICLE: Dry January: it's time to change the narrative
I think most know my views on Dry Jan (if you don't then its Try Jan and drink better not more) so I have left it to the Drinks Business to give some additional thoughts on the topic instead, but it is topical.
OTHER ARTICLES OF NOTE THIS WEEK:
📈 MARKETS IN BRIEF 📉
On the week (as at 16th January 16:45 LDN) changes:
EQUITIES: ⬆️ FTSE 100 up 0.9%; ⬆️ DAX up 1.37%; ⬆️ S&P 500 up 1.38%; ⬇️ Nikkei 225 down 2.6%; ⬆️ Dow Jones up 2.05%;
COMMODITIES: ⬆️ Brent Oil up 4.58% ; ⬆️ Crude Oil up 4% ; ⬆️ Gold up 2.55%; ⬆️Silver up 2.73%; ⬆️ Copper up 2.4%
BONDS (in yield terms): ⬇️ UK 2yrs lower 0.147%; ⬇️ UK 10yrs lower 0.149%; ⬇️ German 10yrs lower 0.0235%, ⬇️ US 2yrs lower 0.022%; ⬇️ US 10yrs lower 0.072%
Persistently strong data from the US, coupled with the Trump inauguration and the risk of tariffs globally are causes for concern - with inflationary risks still fundamentally unresolved. As a result if you are in the long end of the US bond curve, I would like to play it from the short side here, at least in the short term. This in spite of the surprise in December's Core CPI print from the US which actually saw a downside surprise versus expectations. However, for me, it's a minor blip and one which shouldn't hold too much weight at this point in time.
It was actually a similar story in the UK with headline inflation falling back to +2.5% year on year, lower than the market expectation albeit it still feels like there is not much follow through in this fall in inflation and I would be weary of thinking this is the start of the trend lower. It does however give the Bank of England a little more breathing room, even if it is short lived, to think about when and if there should be further interest rate cuts to tame inflation in the more medium term outlook.
As a result, on the week, as you can see above, outside of the Nikkei, the indexes were up and continue to show dividends to those still long in stocks or funds which are made up of especially US tech orientated names. It's been a long that I've run and run and continue to do so as does the rest of the market! (Don't believe me, just look what your pension is invested in!). Tariff concerns are still hampering the oil markets and as a result the price of oil continued to be well supported too this week - not a huge shock there!
Moving to alternative assets, fine wine is optimistic as an industry here. It has had a bad period - for the last 18 months it has not been pretty out there. But there is light at the end of the tunnel. The core thought processes still exist into 2025 namely:
it is an asset which you do not have to pay capital gains tax on (in the UK - check localised rules).
Scarcity of the product drives consistent value growth in the top 1% of all wine names - the 'investment grade wines'.
The low correlation between the fine wine market and the financial markets mean that it does not trend to business cycles so absorbs downward cycles in other assets without a large impact to your valuations. In the 2008 GFC equities (S&P500) fell nearly 40% versus minor moves in the Liv-Ex 1000 index (largely seen as the best trading platform for fine wine globally).
It continues to be a good medium to long investment tool as a way of enhancing income in a diversified investment portfolio.
Stored in bond away from that nagging feeling from you to open and drink it, ensure its authenticity and quality remain - ultimately meaning demand for the product when it comes to being sold.
My expectation is for 2025 to see softening prices in both Burgundy and Bordeaux for their En Primeur release, which will fully reset the pricing scale and then be seen as a buying opportunity for the global investor in the coming months. Keep an eye out for release prices!
As always, if you want to learn more about investing in fine wine as an alternative asset class in a diversified portfolio, then get in touch!
That's all from me this week.
I'm heading further North to see another vineyard to wrap up the week. I hope you are all having great starts to 2025 and I look forward to seeing you at some of the upcoming events or reach out for enquiries or requests!
Cheers 🍷
Andy a.k.a. The Northern Wine Guy
Comments