THE DRAYMAN

Budget 2023

Wine will feel the draught as the duty differential with beer increases

Comparisons are odious, as we’ve been told by many writers over the years, the earliest of whom appears to be the poet John Lydgate in 1440, who said that “engendyrd is haterede”. He was actually advising against comparing horses, geese and sheep, which is all very well and good until you come to bet on the racing and cook Christmas dinner while knitting a woolly jumper.

I wouldn’t normally bang on about the Budget as it bores me – and possibly everyone else – to tears, but last month’s felt like a big moment. It brought forth many more pertinent comparisons between different drinks duty rates than Lydgate’s animal conundrum, with one singled out for a freeze, while others got clobbered by an inflation-linked rise.

The unusual aspect wasn’t that a particular drink was singled out at all, but the means of dispensing it. In a bid to help pubs level up after the pandemic, draught beer got off, while packaged beer, along with almost everything else, got an increase.

It all happens in August, when a realignment of drinks duty around ABV rather than drinks category comes in to blur the picture more, but the government says the move will see the duty on a pint in a pub go up by 11p less than on the equivalent quantity “in supermarkets”.

Note the quote marks there: a subtle nod to the (Camra-assisted) British brewing community’s historical, Animal Farm-like “on-trade good, off-trade bad” mantra, without any acknowledgement that the latter also includes thousands of decent independent shops who’ll also see the beer that they sell become relatively more expensive than that on-tap in pubs. It also overlooks the fact that pubs sell packaged beer too and that, in the hybrid era, many shops (including a branch of Asda!) offer draught beer.

Packaged beer won’t come out of the whole duty realignment-plus-inflation equation too badly either, with the tax burden per bottle or can only likely to go up by just a few pence.

But perhaps of more long-term significance will be the rather useful comparison between beer and wine, which the Wine & Spirit Trade Association said will go up by 44p a bottle at 12.5% abv, and by more at strengths above that. The duty on port, sherry and spirits will go up by considerably more.

Historically, Budget duty hikes are often over-hyped, rarely having any significant impact on drinking habits. But the scale of the autumn increases on wine are not an insignificant few pence – and they aren’t going away. The duty differential between beer and all its competitor drinks categories except cider is growing wider, in beer’s favour, for good.

In the past, duty hikes have usually (though not always) been felt by all categories at the same time and to a similar degree. But August will be a once-only event that may lead to a more thorough assessment than normal of the relative merits to a retail business of different drinks categories.

Many wine merchants already have skin in the beer game, and it’s not much of a stretch to see that customers who buy both beer and wine, and who aren’t perturbed by comparisons, might shift more of their basket spend into the former when they see shelf prices of the latter soar.