Why our prices have dropped by 3p / bottle!

For Light Spirit producers like Cut Classics, UK alcohol duty actually went down rather than up on 1st August 2023.

OK, it was only by around 3p per bottle… so not really a big drop… but we’re not going to be churlish – it certainly beats an increase!

Here’s what happened and why the duty reduction for moderate-ABV spirits should have been much greater:

While producers of stronger spirits lamented the rise in duty from £28.74 per litre of pure alcohol (“PLPA”) to £31.64 PLPA, those of us producing spirits of below 22% ABV saw the rate fall to £28.50 / PLPA. In real terms that’s a reduction of approximately 3 pence per 70cl bottle, rather than an increase of around 41 pence had our ABV exceeded 22%.

Producers of 40% ABV spirits are now incurring an additional 81 pence per 70cl bottle. Those producing cask strength whisky (typically 60-65% ABV), navy strength rum (typically 54.5%-57%) or premium / export strength gins (typically 47% +) are incurring proportionately greater duty increases.

The consultation leading up to the increases made clear that the process was about more than updating (following a prolonged freeze) and simplifying alcohol duty. It deliberately included public health groups as well as the producers and sellers of alcohol; reflecting serious public health concerns following a spike in alcohol-related deaths following the pandemic.

Duties and taxes are a tool at the government’s disposal not only to raise revenue, but also to influence consumer behaviour. It is far from unusual for them to be used with a public health agenda in mind. Hence we now have a sugar tax on soft drinks, while tobacco products have been subject to duty increases for many years.

The government could have maintained a blanket rate across all categories of spirit. By choosing to impose a higher rate on alcoholic products with an ABV in excess of 22%, it has differentiated between mid-ABV products, including Light Spirits, and stronger spirits. We’re absolutely on board with that.

In fact our only quibble is that the distinction between spirits below 22% ABV and those of a higher strength is insufficient.

The Big Distiller lobby has consistently set out both to protect minimum ABV levels of 37.5% in most spirit categories (like minimum sugar requirements in soft drinks and minimum tar requirements in cigarettes… except those things don’t exist), and secondly to draw a link between very high alcohol content and premium quality / exclusivity (think cask strength whisky, navy strength rum etc.). They should have no complaint when their protection and promotion of high alcohol content, with the intention of preserving market share and increasing profit, has a tax / duty consequence.

Conversely, pioneering light spirit brands like Cut Classics have launched products with the intention of enabling consumers to enjoy their favourite spirits at an ABV level (20%) that is far better aligned to the understanding that we have of the negative health and social consequences of excessive alcohol consumption in 2023. Slashing the duty on moderate-strength spirits would have sent a strong message in support of moderation. An opportunity missed.

For now, we’ll live with our thruppence duty reduction whilst looking forward to a future in which minimum ABV legislation has been torn up and moderation-strength spirits are rewarded with materially lower duty levels.

You'll note that we've passed on the duty saving by reducing our per bottle prices by 3p!!!

#abv #spirits #spiritstrength #moderation #lightspirits #alcohol #mindfuldrinking


Photo Credit:  New York Public Library (on Unsplash.com)