Duty escalator to blame for shrinking Scotch sales in UK

By Gemma McKenna

Published: 12 March, 2014

The UK market for Scotch whisky has contracted by 3% in the last year as duty increases put pressure on the industry.

Figures from Her Majesty's Revenue and Customs show that sales of 70cl bottles of Scotch whisky fell from 90 million in 2012 to 87.5 million in 2013.

The Scotch Whisky Association said this is further evidence that the alcohol duty escalator, introduced in 2008, is damaging a vital domestic industry. Scotch whisky supports 35,000 jobs and is critical to many fragile rural and urban communities. The escalator has seen duty rise by 2% above inflation every year since 2008. Tax on Scotch whisky has gone up 44% in five years, with 79% of the average price of a bottle now made up of tax and VAT.

Since the escalator was introduced, the UK market for Scotch whisky has declined by more than 15% in volume from 103 million bottles in 2008. Some 16 million bottles of Scotch have been lost from the domestic market in the last five years.

Be fair George Be fair GeorgeThe SWA is urging the Chancellor to scrap the escalator and freeze duty in order to safeguard the industry, consumers and boost public finances.

Ahead of next week's Budget on March 19, the SWA is urging the Chancellor to 'Call Time on Duty'. The body, along with the WSTA and TaxPayers' Alliance, is calling for the alcohol duty escalator to be scrapped and duty frozen. It argues that this would be fairer on the industry and consumers, and would also boost public finances.

In last year's Budget, the escalator was removed from beer and duty was cut. Whisky drinkers now pay 48% more duty than beer drinkers for the same amount of alcohol.

David Frost, Scotch Whisky Association chief executive, said: "It's obviously disappointing to see this decline in Scotch Whisky volumes in our domestic market. In next week's Budget the Chancellor has the perfect opportunity to support a vital Scottish industry. He should scrap the unfair alcohol duty escalator and freeze duty this year. This move would also benefit consumers and public finances.

"Since the introduction of the escalator in 2008, the UK market for Scotch whisky has shrunk by more than 15%. Fairer tax treatment would help address this decline in the UK. It would send the right message to overseas governments in markets where imported products, such as Scotch whisky, face discrimination. It would also reflect and support the UK's drive for export-led growth."

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