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Tax increases force alcohol prices skyward

Published:  17 June, 2011

Record tax increases are driving the price of wine and spirits up dramatically in both the on and off-trade, according to figures from the WSTA's latest Market Report.

Despite flat or falling volume sales in several categories, prices are being forced up across the board thanks to an above inflation increase in excise duty and the rise in VAT, the report shows.

Key findings include shop sales of spirits in the year to May 14 were flat in volume but up 6% in value, and in the on-trade, sales volumes of wine fell 1% yet the value rose by 10% in the year to April 16. In the same period on-trade sales of spirits were flat in volume but up 3% in value.

"In the off-trade the impact of price rises driven by tax increases is demonstrated by dramatic falls in the sales of cheaper wines with figures suggesting a net loss as some consumers are switching to other categories, including British made wine using imported grape juice and cider," the WSTA said.

Shop sales of wine were down 42% in the sub £3 category and down 20% in the £3 to £4 range in the year to May 14 - equating to 10.4 million fewer cases.

Wine sales in the £4 to £5 were up 24% - equating to an increase of 6.2 million cases.

Sales of British Wine were up 39% in volume and 53% in value, and shop sales of cider were up 5% in volume and 8% in value over the past year.

There was also significant growth in wine sales at higher price points, with sales of wine in the £9 to £10 range up 34% in volume and value on last year, and sales of wine in the £10 plus range up 12% in volume and value.

WSTA chief executive Jeremy Beadles said: "The impact is being felt particularly in pubs and restaurants as people go out less and that switch is seeing some consumers spending on treating at home instead. Overall consumers are feeling the pinch."

The WSTA Market Report, which also features exclusive consumer research focusing on social media and online retail, is available at