Duty rate change expected to boost sales of lower strength alcohol

Lower strength alcohol will have increased prominence in bars and restaurants when the new alcohol duty rate comes into force on 1 August, according to UKHospitality’s chief executive.

Speaking to The Caterer, Kate Nicholls said: “You will see lower strength products coming through onto menus, and a wider range of lower strength products.”

The government will increase duty rates under a revised structure in line with the Retail Price Index (RPI) at 10.1%. Increases will generally be applied on a sliding scale according to alcohol content; the higher the alcohol per volume (ABV), the higher the new duty rate will be.

Nicholls cited the example of wine, where variations in alcohol strength can be broad. She said operators across the sector are reviewing their wine lists to reflect the changes in price that are coming through.

Lower strength wine (those under 11.5%) will be charged at a lower rate than higher strength wine (11.5% to 14.5%). For example, a 75cl bottle of still wine at 11% ABV will see duty increase by 12p, from £2.23 per bottle to £2.35, while a 75cl bottle of still wine at 12% ABV will see duty increase by 44p, reaching £2.67 per bottle. For still wines at or above 15% ABV, the increase will be 90p, rising from £2.23 to £3.21.

Nicholls said that bar and restaurant managers will be “scrutinizing” their drinks offerings and speaking to suppliers to source the best deals, particularly in the climate of rising costs elsewhere. She added: “[This] is just not sustainable in the current environment and that leads to stocking decisions and the focus of where you have certain products on the menu.”

Differences are expected to be seen most clearly in outlets with a lower average spend. “[For] those who are used to paying £200 for a bottle of wine, adding an extra 20% on is not going to deter them,” said Nicholls.

“But if you're talking about your local neighbourhood restaurant or your local pub, and the price of one glass of rosé is 30p-50p different, customers will choose differently.”

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