Blog: Internal affairs
Chris Brook-Carter | 2 March 2004
An unusual battle is brewing in the UK drinks industry, as wine and beer producers look to curry favour with the Chancellor of the Exchequer.
According to a report in the Financial Times last week, brewers and pub owners have taken the unusual step of claiming that wine was taxed too lightly compared with beer.
The gripe seems to stem from the fact that wine consumption has boomed over the last few years, while beer sales have been stagnant.
In fact brewers went so far as to say that the government could have added an extra £91m to the coffers in 2002 if it had taken account of the UK's increased consumption of New World wines.
The Wine & Spirit Association has of course hit back, claiming that it has been the loser because beer is taxed according to strength but most wine pays a flat rate, regardless of differences in alcoholic content.
Its a dangerous argument for the winemakers, as the trend in the UK has been away from lighter, less alcoholic wines such as Hoch towards stronger Australian brands, particularly reds.
That said, the beer industry has more to blame for its lacklustre performance in recent years than tax discrepancies. And as the industry in general battles against the grey market, across the board tax increases and threats to its advertising rights, a united front is sorely needed.
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