Alcohol Duty: UK Wine Sector

Ashley Fox Excerpts

Tuesday 11th November 2025 Westminster Hall

[Gregory Stafford (Farnham and Bordon) (Con)]

I beg to move,

That this House has considered the impact of alcohol duty on the UK wine sector.

It is a pleasure to serve under your chairmanship, Mr Turner. I am grateful to colleagues for attending this evening’s debate. A bit of background and heritage: the United Kingdom has long been a global hub for beers, wines and spirits. Dating back to 1698, with the founding of Berry Bros. & Rudd, we are the largest exporter of spirits in the world and the second largest importer of wine by both volume and value. The sector represents some of the very best of British enterprise: from heritage distillers to pioneering new producers who continue to innovate and support our economy. Behind every bottle on the shelf is a small family business, a logistics worker or a hospitality employee whose livelihood depends on the trade.

Each year, the United Kingdom imports the equivalent of 1.7 billion bottles of wine, accounting for 99% of all wine consumed here. This vibrant culture of responsible enjoyment sustains our high streets, supports independent retailers and provides essential income for pubs and restaurants that continue to face difficult trading conditions. In 2024, more than £12 billion was paid to the Treasury in alcohol duty, with wines and spirits contributing £8.5 billion—around 70% of that total. The wider wine and spirits sector generated more than £76 billion in economic activity in 2022, supported £22 billion in gross value added and sustained more than 400,000 jobs.

However, when more than 60% of the cost of a bottle of wine is tax, we must ask who is truly being squeezed—the consumer, the publican or the common sense of good economic policy? The reality is that the margins for producers and retailers are tightening. There is a limit to what the British public are willing to pay before they simply choose to stay at home. Changes in duty directly alter prices on the shelf and on restaurant wine lists. Every percentage point of duty may appear small in Whitehall, but for many businesses, it is the difference between survival and closure. Treasury Wine Estates, the producer of brands such as 19 Crimes and Penfolds, has warned that further tax increases will deepen pressure on hospitality. Its managing director of global premium brands, Angus Lilley, stated that higher costs mean tougher choices for local pubs, higher prices for consumers and less money circulating through the hospitality sector, which keeps our towns and cities vibrant.

A recent YouGov poll commissioned by the Wine and Spirit Trade Association found that one in four regular drinkers will buy less alcohol from shops if prices continue to rise, and two in five will reduce their consumption in pubs and restaurants. In my constituency, we have excellent local brewers such as Tilford and Kilnside, and craft distillers such as Hogmoor distillery; I had the pleasure of visiting the team recently and sampling their locally made spirits. Those are small creative producers that bring jobs, pride and flavour to their communities, but they will not survive if the alcohol industry continues to face relentless pressure from Government policy that fails to support its long-term sustainability. If we price people out of the pub, we do not just lose the sale; we lose the cornerstone of British community life.

Turning to the current picture, sales data illustrates the scale of the problem. In the 12 weeks to mid-June this year, volume sales for wine were down by 3% in the off-trade, rising to 5% for spirits. The picture in the on-trade is even more severe, with wine volumes down by 7% and spirits by 8%. Hospitality has been one of the hardest hit sectors of the economy since the Budget, accounting for nearly half of all job losses. We are now taxing our way to lower revenues. That is not sound economics; in fact, it is counterproductive. As one industry voice put it:

“Britain is becoming the most taxed place to raise a glass and the hardest place to sell one”.

Colleagues will recall that in 2023, the UK moved from the inherited EU duty framework to a strength-based system taxing wine by labelled alcohol by volume in 0.1% increments. Alongside that reform, the headline rate increased in August 2023, and it increased by a further 3.65% in February of this year. For a 14.5% ABV wine, that represents a cumulative increase of around 44% in just 18 months.

[Sir Ashley Fox (Bridgwater) (Con)]

I am grateful to my hon. Friend for securing this debate. On the point about excessive tax inhibiting entrepreneurship, I visited Ned Awty and his family, who run the Oatley vineyard in Cannington in my constituency, and they pointed out that it is perverse that the United Kingdom has a duty relief scheme for small brewers and distillers but no similar scheme for small vineyards. Does my hon. Friend agree that a small duty relief scheme for small producers would help English wine producers—and that we could all raise a glass to that?

[Gregory Stafford]

My hon. Friend is absolutely correct, and he pre-empts something I was going to say later about the inconsistencies and unfairness in the current system. Small producer relief is capped at 8.5% ABV, and the Government should look at what they can do for the smaller producers that he mentions.

The TaxPayers’ Alliance has highlighted that the UK has the third highest wine duty in the world, now at £2.44 per bottle—an increase of 9p since 2023. By comparison, France charges the equivalent of just 2p per bottle and Romania 1p, and Spain applies no excise duty at all. In fact, half of the EU’s 27 member states do not charge duty on wine whatsoever. When neighbouring countries impose far lower rates, our competitiveness suffers. We pride ourselves on being a global trading nation, but we have priced ourselves out of the very markets we helped to create. Labour’s current approach is short-sighted and self-defeating: taxing ambition, throttling innovation and penalising productivity. The Treasury cannot build growth by breaking the back of the very industries that deliver it. As Winston Churchill put it in 1904, we cannot tax our way to prosperity any more than we can drink our way to sobriety.

I turn to the inconsistencies and unfairness in the system, which my hon. Friend just mentioned. Products with an ABV of between 8.5% and 22% are taxed at the same rate per litre of pure alcohol, and yet producers of beer with an ABV of between 3.5% and 8.4% pay more than twice as much duty as producers of cider of the same strength. Small producer relief, although it is welcome in principle, is capped at 8.5% ABV and therefore excludes virtually all winemakers and distillers. This policy fails to support small English wineries such as Chapel Down—in the constituency of my hon. Friend the Member for Weald of Kent (Katie Lam)—Nyetimber or Camel Valley, which I am sure Members are all familiar with, and which contribute to rural employment and agricultural production.