Spirits boss warns customers could pay more for booze after Budget

The boss of a distillery company has said people might have to pay more for rum, vodka and gin drinks after a hike in alcohol duty in Labour’s Autumn Budget.

Hannah Boon, the managing director of Distinct Distillers, described the move as ‘disappointing’ and said spirits makers might have to pass on the cost to customers.

In her first Budget as Chancellor, Rachel Reeves announced yesterday there will be an inflation-linked rise in alcohol duty for all drinks other than draught beer.

Beer drinkers will see a penny knocked off their pints, while spirits drinks will have to pay more depending on what the Retail Price Index (RPI) figure is from February 1, 2025 as a part of Labour’s efforts to plug what it claims is a £22 billion ‘black hole’ in public finances.

According to a document released by the government to explain Budget decisions, the move ‘will encourage responsible drinking in social, controlled settings’.

Ms Boon told Metro: ‘The duty increase is disappointing, there’s already a significant gap between the duty paid on spirits versus wine and beer and cider. So to see that go up again is disappointing.

‘I imagine a lot of manufacturers will have no choice but to pass it on. But ultimately, then that will impact customer demand and so we’ll we’ll see a drop in sales, no doubt.

‘But it’s not just the duty element, the duty element you kind of come to expect. It’s all the issues with increases with National Insurance and minimum wage that are going to significantly affect the hospitality industry. In turn, that’s going to affect producers.’

She added that she believes the increase will be about 30p a bottle for drinkers.

‘We’ll weather the storm, it’s just unfortunate there’ll be a lot a lot of smaller ones that are on the knife edge that won’t be able to weather the storm,’ she added.

‘We haven’t really looked at what we will do with duty next year just yet, it’s all just sort of sinking in.’

Pub chain Mitchell and Butlers meanwhile described Labour’s Budget as a ‘bad Budget for our industry.’

A spokesperson said: ‘The reduction in duty on draught beer is obviously welcome but increases on other alcoholic drinks mean that we’ll still be paying more in duty overall as a result of this budget.

‘All of that is small beer however compared to the impact of national insurance. Lots of hospitality workers choose to work flexible hours or part time. The much lower threshold at which employer contributions kick in will therefore hit hospitality businesses very hard.’

Alcohol duty was frozen for almost three years from autumn 2020 to August 2023, during which time the UK saw an increase in taxable revenue.

But following then-Chancellor Jeremy Hunt’s tax on alcohol in 2023 in line with inflation, prices went up by 10%. He also changed the way duty was calculated for wine, which saw it increase in price by 20%.

From September 2023 to August 2024 alcohol duty raised £11.8 billion, down from £13.1 billion in the same period the year before.

The biggest drop was for spirits, whose revenue plummeted by £750 million, followed by beer which saw a £320 million drop in profits.

Beer campaign group Camra backed the Chancellor’s move to cut duty on draught beer, with chairman Ash Corbett-Collins saying he was ‘pleased’ by it.

He said: ‘This will help pub goers as well as independent breweries and cider producers who sell more of their products into pubs, and recognises the principle that drinking in the community setting of the local pub is far preferable to the likes of cheap supermarket alcohol.’

The drinks firm behind Magners and Tennent’s said it has seen ‘some consumer caution’ ahead of today’s budget.

It came as C&C Group revealed lower sales for the past half-year as poor summer weather hit demand for cider.

Shares in the company slipped on Tuesday morning as a result.

The company said: ‘Trading conditions remain tough, and sentiment regarding the UK autumn Budget has generated some consumer caution; however, positively, we have well-executed plans in place for the Christmas and New Year period, as well as encouraging trading momentum.’

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