Wine sellers ‘powerless’ to prevent price hikes as tax system set to change

Wine sellers are warning customers that prices could rise and some bottles disappear from shelves next year if a new tax system comes into effect.

Majestic and Cambridge Wine Merchants are among retailers contacting their customers to prepare them for the potential impact.

New tax rules are set to come into force from February 2025 as a result of plans introduced by the previous Conservative government.

The wine industry has warned that the changes will heavily complicate the system by introducing more than 30 different duty bands.

This will affect the amount of duty paid on wines between 11.5% to 14.5% alcohol by volume (ABV), which account for about 80% of the UK market, according to the Wine and Spirit Trade Association (WSTA).

A bottle of wine at 14.5% ABV would see duty increase from £2.67 to £3.09.

Wine sellers say they will be “powerless” to protect consumers from price hikes if the policy changes go ahead.

“Most concerningly for you as discerning wine drinkers, the quality and choice of wine available for you to purchase is likely to be negatively impacted,” a letter sent to Majestic and Cambridge Wine Merchants customers read.

“There is a genuine risk that the producers of your favourite wine will stop shipping it to the UK entirely, due to the additional administrative burden that will be involved in exporting wine to Britain.”

Smaller, family-run vineyards could more “easily export their wines elsewhere in the world without additional admin or cost”, the letter warned.

“Whether your favourite wines increase in price, or disappear from shelves altogether next year, we, as an industry, will become powerless to protect you from that,” it added.

But the retailers say the new Labour Government has the opportunity to reverse the former prime minister’s plans at the Budget statement at the end of the month.

John Colley, chief executive of Majestic, said it had been working with the WSTA to engage with MPs and lobby for urgent change.

“We hope to see evidence on October 30 that the Chancellor has addressed our concerns by reversing the decision of the former government, and helping small business and the industry by extending the wine easement,” he said.

An 18-month “easement” period has been in place to enable businesses to adapt to the new system, during which wines between 11.5% and 14.5% ABV have been taxed at a flat rate per bottle.

That temporary system will come to an end on February 1.

Laithwaites and The Wine Society are also expected to be contacting their customer base about the changes.

The Treasury has been contacted for comment.