Higher tax forcing up wine and spirit prices

The cost of wines and spirits in shops and bars and restaurants is rising rapidly as tax increases continue to force up prices, new figures from the Wine and Spirit Trade Association have revealed.

Sales figures for the year to 14 May show that despite flat or falling volume sales in several areas, prices are being driven up by the impact of record tax increases on alcohol.

The value of spirits sold in the period was up 6 per cent - despite the amount of the product sold remaining steady.

The amount of wine sold dropped by 2 per cent, but the money paid for it by consumers rose by 3 per cent.

"This year's further above- inflation increase in excise duty and the rise in VAT and other taxes have really fed through to prices and millions of hard-pressed consumers know it only too well," said WSTA chief executive Jeremy Beadles.

But shop sales of cheap wine - under 3 - were down 42 per cent and 3 to 4 bottles down 20 per cent in the 12-month period - while sales of higher priced bottles of wine rose. Wine sales in the 4 to 5 category were up 24 per cent - equating to an increase of 6.2 million cases - while sales in the 9 to 10 range were up 34 per cent in both volume and value on the previous year.

The WSTA said the trend to buy more expensive wine at off sale pointed to a shift from drinking and eating out to spending more time at home. Tax increases have also affected sales of cheaper bottles of wine - as very low-cost products are less readily available.

"The impact is being felt particularly in pubs and restaurants as people go out less and that switch is seeing some consumers spending on treating at home instead," said Mr Beadles. "Overall, consumers are feeling the pinch."

In the on trade - bars and restaurants - sales volumes remained flat for spirits and dropped slightly, by 1 per cent, for wine.

The WSTA added that it had noticed a trend for consumers to move towards British-made wine, using imported grape juice, and cider.

Sales of British wine were up 39 per cent in volume and 53 per cent in value, while sales of cider rose by 5 per cent in volume, with a particularly marked increase during the last quarter, when the amount sold rose by 12 per cent.

Jane Bradley