An independent wine merchant has written an open letter to the Government, warning of the effects of a further increase in excise duty on alcohol products will have in its business and the on-trade.
Martin Platts, owner of Just Fine Wines, has also started an e-petition to combat the duty escalator. He highlighted the fact that as of the 2011 Budget, the duty on a 750ml bottle of wine with an alcohol percentage of between 5 and 15% by volume is currently £1.81, before VAT is applied.
He warned that the tax was unfairly hitting dedicated wine merchants, unlike supermarkets, which could use wine as a loss leader while selling other products.
"Since 2006, duty on a 750ml bottle of still wine has increased by more than 55p (44%), yet the supermarket price point has barely moved and 3 for £10 promotion deals are still regularly seen; their suppliers are pressured to absorb these increases each time an excise increase has been made, or cut-price promotions have been used and offset against other products, to avoid price increases."
"The independent sector cannot afford to absorb these duty increases, over the past 10 years duty has increased by 62%, putting huge pressure on cashflow. Even with a duty deferment account payment of excise is usually made by a wholesaler long before the wine is sold; unlike VAT which is applied at point of sale, therefore independent retailers and wholesalers are unable to compete at entry level for sales. This leaves the largest wine sales market for the big players."
While Platts acknowledged that it would be impossible to hand alcohol sales back to dedicated merchants, despite potentially making the regulation of alcohol sales easier, he suggested that supermarkets be made to sell alcoholic drinks in a separate location, away from the main grocery store.
"Increasing the price of wines and alcohol-related products may well deter some individuals from making a purchase but using the duty element as the tool to accomplish this is highly ineffective and has a devastating effect on our business, and associated business sectors crucial to the future of the UK economy.
"In the interest of protecting the future of the UK independent wine trade and associated independent businesses, I call on all wholesale, retail, on-trade and off-trade sectors to petition the current government to halt the progress of the alcohol duty escalator," he said.
By Neil Gerrard
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