Duty escalator depresses sales of Scotch Whisky in its home market
30 Apr 2013
Scotch Whisky sales have declined by 12% in the UK over the last
five years since the introduction of the alcohol duty
UK sales volume has dropped from 102 million 70 cl bottles of
Scotch Whisky a year in 2007 to 90 million bottles in 2012. At its
annual general meeting in Edinburgh yesterday, Scotch Whisky
Association (SWA) members discussed the negative impact of the duty
escalator and the tax treatment of Scotch Whisky by the UK
The duty escalator was introduced in March 2008 by
then-Chancellor Alistair Darling, with duty being increased by 2%
above the rate of inflation each year. The exception was this
year's Budget when the duty escalator was removed from beer and the
beer duty was cut. As a result, drinkers of a dram are now paying
48% more duty than a beer drinker, distorting the alcoholic drinks
market in the UK. The SWA described last month's Budget decision by
Chancellor George Osborne as "an unfair and incomprehensible blow
to Scotch Whisky".
Industry members expressed concern that calls for an end to the
duty escalator on Scotch have been dismissed by claims that UK tax
does not hamper the industry as it sales are primarily
overseas. The UK, however, remains the third most important
market for Scotch Whisky producers, accounting for 7% of global
sales volumes. Some 80% of UK sales are south of the border.
The SWA is calling for the duty escalator on Scotch Whisky to be
scrapped to support, rather than penalise, the industry which
boosts the UK economy. The industry supports 35,000 jobs across the
UK, many in economically challenged areas.
Gavin Hewitt, chief executive of the Scotch Whisky Association,
"Scotch Whisky can only be made in Scotland and is vital to the
UK and Scottish economies. It is time the UK Government started
treating the industry more fairly in its domestic market. The duty
escalator penalises ordinary people at a time of economic pressure,
increases the inflation burden, depresses the industry when the
Government says it wants to stimulate economic growth and sets an
unwelcome tax precedent for other governments to follow in taxing
Scotch Whisky exorbitantly.
"There is no justification for spirits being taxed more heavily
than beer. After more than half a decade, the Government should
review the duty escalator rather than maintain the mantra that it
should run for the remainder of this Parliament. The
escalator will further depress the volume of sales of Scotch Whisky
in the UK."
The 5.3% increase in spirits duty in this year's Budget led to a
47 pence rise in the average price of a standard 70cl bottle of
Scotch Whisky from £12.42 to £12.89. Total tax, including VAT and
excise duty, now accounts for 80% of the price of a bottle of
Scotch Whisky in the UK.
Of the European Union members states only Ireland, Finland and
Sweden have higher taxation on spirits than the UK.
In the five years to 2012 the volume of Scotch Whisky exports
has increased by 10% from 1.1 to 1.2 billion bottles a year. Such
success overseas in contrast to a decline in sales in the UK shows
the detrimental impact of government policies on the domestic
Notes to editors
For further information please contact Rosemary Gallagher, SWA
communications manager on 0131 222 9230/0743 260 5385 email email@example.com or
Campbell Evans on 0131 222 0231/07768 002 262 or email firstname.lastname@example.org