Blog: Will the bubble burst?
Olly Wehring | 21 March 2007
The drinks industry, like much of the UK, has today (21 March) given a mixed reaction to the country's latest Budget.
Distillers raised a glass to the decision from Chancellor Gordon Brown to freeze duty on spirits. Their cousins in the beer and cider industries, meanwhile, saw tax on their products linked to inflation.
However, the picture for the UK wine trade, already working in tough industry conditions, was far from rosy. Duty on still wine rose by 5p (US$0.10) - in line with inflation - but the tax on sparkling wine has increased by 7p.
Jeremy Beadles, chief executive for the UK's Wine and Spirit Trade Association, was seething at the news.
Beadles told just-drinks that the discrepancy between still and sparkling wine had its origins in the time when the UK was at war with Napoleon and had no place in today's economy.
However, Beadles painted a gloomy picture for the outlook of the sparkling wine sector in the UK. He said the hike in duty on sparkling wine would hit the bottom line of suppliers.
"The UK will be a much less attractive market to supply into," Beadles said. "With declining margins and profits, suppliers are likely to stock elsewhere, which would lead to reduced choice and quality for consumers."
Whether the Champenois and others hit by the higher duty on fizz will scale back their business in the UK is debatable.
Nevertheless, will the tax hike burst the bubble of what has been one of the UK wine industry's more buoyant categories?
The UK wine industry is renowned for being driven by fierce price competition, particularly in the off-trade. How easy will it be for producers to pass on an increase in duty to fickle consumers, who are always on the look-out for the best deal?
We want to hear your thoughts.
Want to know how The Coca-Cola Co-backed Keurig Kold - released in the US yesterday - works?...
While analysts mull the numbers of Anheuser-Busch InBev's impending offer for SABMiller, there's a timely reminder in The Times newspaper this week that the proposed deal may yet fall victim to other ...
Part of my lot on just-drinks is to nail down senior executives within our industry – the more senior the better. I've enjoyed interviewing many of the CEOs within our ranks, but one that I have never...
Sometimes, it's the simple things in life that are the most satisfying. Like a good book and a decent glass of wine......
- Are we kidding ourselves over craft spirits?
- What's behind Brown-Forman's Irish whiskey plans?
- Is Brown-Forman doing a Jack Daniel's in Ireland?
- How good a sustainability fit are ABI and SAB?
- The new Johnnie Walker ad and today's consumers
- Diageo, Treasury Wine Estates quiet on wine sale
- Chandon to become "third pillar brand" for MH
- Brown-Forman silent on Southern Comfort report
- Stoli appoints international marketing director
- Moet Hennessy hails Formula One deal for Chandon
- The IWSR Duty Free/Travel Retail Report 2015
- Future growth opportunities for global spirits
- Global gin insights - market data, product innovation and consumer trends research
- Global non-Scotch whiskies insights - market forecasts, product innovation and consumer trends research
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends research