Gin makers in the UK have called on the government to freeze the duty on spirits and extend a VAT cut for the hospitality sector in order to boost business.
According to the Wine and Spirit Trade Association (WSTA), gin exports have fallen by more than a third (35%) since the start of the pandemic, recording sales of £215 million (€254 million) in the first half of this year (down from £332.6 million).
On a domestic level, gin sales have also been impacted by the prolonged closure of the hospitality trade – in the 12 months to July 2020, sales totalled £1.1 billion, but this has dropped to £647 million in the period to July 2021.
High Tax Rate
For each bottle of spirits that is sold in supermarkets and retail outlets, 73% is taken by the government in terms of tax and VAT, prompting the industry, which comprises a large number of small and medium-sized enterprises, to call for action.
"Following the closure of the hospitality sector, in a series of crippling lockdowns, British gin makers who supplied pubs and restaurants both home and abroad saw orders grind to a halt," commented Miles Beale, chief executive of the Wine and Spirit Trade Association.
"Instead of sitting idle, many distillers switched production to make hand sanitiser with many donating batches to the vulnerable and NHS workers. When the country needed support, SME distillers were quick to respond. The Chancellor has an opportunity to make a small gesture of thanks by freezing spirit duty in the Autumn Budget.”
Largest Spirits Exporter
The UK is the world’s largest spirit exporter. In 2019, Britain recorded over 440 distilleries, an increase of 22% on 2018 and more than double the number of distilleries recorded in 2014.
According to Matthew Gammell, co-founder and head distiller at Pickering’s Gin, while the industry has been able to "adapt to survive", a long road is ahead for the sector.
"The last 12 months has also seen huge raw material price increases along with the energy price rises, so a further increase in the duty rate would only result in an even higher price for the consumer and further inhibit the opportunity for the industry to recover," he said.