UK alcohol tax gain is £6.5bn annually

04 September, 2015

The health lobby’s claims that alcohol is a costly burden on society have been decimated by a new study showing the government makes £6.5 billion profit a year through the nation’s love of drinking.

The NHS, police force and welfare system collectively spend £3.9 billion a year dealing with drink-related social problems, but this is far outweighed by the £10.4 billion the Treasury gains from tax on alcohol, according to the Institute for Economic Affairs.

The think tank argued that the government could halve alcohol tax and still have enough money to cover the cost of problem drinking and make a tidy profit.

Report author Christopher Snowdon said: “It is time to stop pretending that drinkers are a burden on taxpayers.

“Drinkers are taxpayers and they pay billions of pounds more than they cost the NHS, police service and welfare system combined.

“The economic evidence is very clear on this — 40% of the EU’s entire alcohol tax bill is paid by drinkers in Britain and, as this new research shows, teetotallers in England are being subsidised by drinkers to the tune of at least £6.5 billion a year.”

That figure looks only set to rise as BWS sales continue to grow. Surging summer sales of vodka, gin and sparkling wine have led the total off-trade BWS market into 0.7% value growth on the previous year (Nielsen, 12 weeks to August 15, 2015).

Spirits were the star performers in the market, with sales up 5% compared with the same period last year. Nielsen said vodka and gin, up 4% and 9% respectively, were key growth categories, adding £17.5 million to the market between them.

Sales of sparkling wine topped £157 million in the 12 weeks to August 15, an increase of 23% on the previous summer.

The Institute for Economic Affairs argued that Prosecco-loving Brits are actually subsidising teetotallers to the tune of several billion pounds a year.

Snowdon said: “Our estimates suggest that the net cost of alcohol to the state is minus £6.5 billion, which is to say that drinkers subsidise non- drinkers to the order of £6.5 billion a year.

“The government could halve all forms of alcohol duty and still receive more in tax than it spends dealing with alcohol- related problems.”

Despite the UK having the highest tax rates on alcohol in all of Europe, Brits still cannot get enough Prosecco, and that is driving most of the growth in the BWS market.

The Italian fizz has chalked up its third year as the nation’s favourite sparkling wine, with sales in supermarkets, off- licences and convenience stores up 72% in the past year (IRI, year to July 18, 2015).

It added £142 million to the grocery sector in the past year and sales now total £338 million.

Champagne sales grew 1.2% in the same period and Cava sales dropped by 11%.

Toby Magill, head of beer, wine and spirits insights at IRI, told OLN: “Prosecco is doing well at a crucial time. Supermarkets are cutting sparkling wine ranges, and if Cava bears the brunt of that and Prosecco comes out with more space then it will start riding the crest of the recovery in the next year or so, with more space, fewer rivals on shelf and an increased customer base.

“Prosecco is getting more space and focus in store because it works so well on promotion. As it gets more popular retailers put in more effort.”

While sparkling wine sales have soared, lager has endured a torrid summer, down 4% on last year, which equates to an £18 million drop, with disappointing weather plus the absence of a major football tournament blamed.

Cider was also hit by poor weather and sales dipped 6% (Nielsen, 12 weeks to August 15, 2015). Light wine was down 1%, with rosé the worst hit, down 7%, while RTDs also suffered an 8% dip in sales.




Bookmark this


Site Search

COMMENT

Donald Trump: the US has much to learn from history

The reasons Donald Trump should not be left in charge of a shopping trolley, let alone the keys to the White House, are plentiful and well-documented – from his use of the word “bigly” and lamentable business legacy to his dubious post-modern feminist principles, quite astonishing lack of political acumen and, most worrying of all, his bewildering hair. 

Click for more »
Upcoming events

Polls

Is blended Scotch overshadowed by single malt in retailers?

  • Yes
  • No
  • Don't know

Facebook

Twitter