A number of organisations representing the UK’s spirits industry are calling on the Chancellor to announce a freeze on alcohol duty ahead of this month’s autumn statement. This follows the 10.1% duty hike on spirits back in August - the largest tax rise on alcoholic products in nearly 50 years.

Speaking on behalf of over 400 producers, groups such as the Scotch Whisky Association (SWA) and the Wine and Spirit Trade Association (WSTA) fear that further duty increases would be terribly damaging for the spirits industry.

The UK Spirits Alliance (UKSA) recently conducted a survey of its members, which comprises of over 280 small and independent distillers across the country, and asked them for analysis of their past 12 months as well as projections for the future. Unfortunately, many of the responses paint a worrying picture.

54% of respondents felt as if their business has not fully recovered or had only partially recovered from the pandemic and 40% reported a decrease in sales over the past year.

When asked about the implications of another duty increase, 61% of distillers expect to reduce production following a decrease in demand, while 70% expect a tax rise to negatively affect their ability to re-invest in their business in areas such as production capacity or green innovations. 43% also predict that if the industry is not supported then staffing levels will inevitably be affected.

These figures are backed up by other research; WSTA recently reported a 20% drop in spirit sales among their members in the 28 day period leading up to 20th November, with wine also affected by a double-digit decrease.

In short, it appears as if the on-going cost of living crisis is negatively affecting both on and off trade sales, and this has only been compounded by the alcohol tax rise in August.

On the back of this research, the industry are highlighting the self-defeating nature of another rise in alcohol duty: businesses will be forced to put this additional cost to the consumer (especially in the face of rising costs for producers), which will likely lead to a further decrease in sales; fewer sales ultimately means less money going to the Exchequer.

In writing to the Chancellor, the spirits industry are also critical of the government’s Brexit Pub Guarantee. This pledge promises that the duty pubs and bars pay on beer and cider will always be less than retailers and it’s been argued similar support should be offered for spirits.

One study noted that spirits account for a third of all on-trade sales, so a guarantee akin to that offered for beer and cider would be incredibly beneficial for both spirit producers and the wider hospitality industry.

With regards to whisky, the SWA is leading calls for fairer taxation on Scotch. Scotch whisky is the highest taxed alcohol product in the UK and is charged at a much higher rate than any other European or G7 nation.

Following the August duty rise, the tax on an average priced bottle of whisky rose from 70% to 75%, squeezing what were already tight margins across the industry. SWA argue that supportive tax action in previous budgets resulted in growth within the industry, growth which will be threatened if not completely undone by any further increase in duty.

Recent years have undoubtedly been a ‘boom’ period for the Scotch whisky industry. We can barely go a week without the announcement of a new distillery, news of an exciting release from an established favourite, or details of record breaking sales at auction. In particular, the rise of small, craft distilleries has been wonderful to witness and there’s arguably never been a better or more interesting time to be a whisky drinker, or indeed a fan of any spirit.

The spirits business is a cornerstone of the UK economy. Distilleries of all sizes provide employment to local communities and produce well-reputed spirits enjoyed the world over. In turn, enthusiasts travel to distilleries throughout the UK, bringing valuable tourist income to every corner of the country.

Smaller producers are the most likely to be negatively affected by any duty increase. If the projections and statistics stated above are anything to go by, this could be catastrophic for small distilleries. The worst case scenario would be closure, and the closure of any distillery would be a tragedy.

Of course, I write that from a slightly selfish point of view - poor me missing out on my precious small batch, micro-produced Scotch -, but the implications of a second duty hike this year could be far reaching and largely negative.

However, in the face of all this doom and gloom it’s worth remembering that there might be some space for optimism. At the time of writing, nothing has been confirmed, and the government potentially crippling an otherwise thriving industry seems baffling to the point that it doesn’t feel real. Here’s hoping for positive news come the budget’s announcement.