Unveiling the last budget before the May general election, Alistair Darling announced that duty on cider is to increase by 10% above inflation, currently at about 3%, while duty on wine, beer and spirits will increase 2% a year until 2013.
Darling says the increase in cider duty addresses a tax “anomaly” between cider and beer. The definition of cider will also change to ensure stronger variants are taxed more heavily.
Cider makers have expressed concern that the rise in duty will reverse the growth the market has enjoyed over the past 10 years, driven by the success of brands such as Magners and Strongbow.
Henry Chevallier, chair of the National Association of Cider Makers, says: “We are at saturation point on the duty on alcohol – even for a success story like cider.
“This dramatic increase could well reverse the growth we have generated in recent years.”
The Wine and Spirit Trade Association, claims “successive punitive tax rises” on wine and spirits, 25% and 20% respectively are “taking their toll on household budgets” and will hit sales.
Brigid Simmonds, chief executive of the British Beer & Pub Association, claims the increase in beer tax “piles on the misery” in a sector already reeling from pub closures, job losses and falling sales.
Molson Coors, which makes the Coors and Carling brands, says although increasing cider duty to match beer tax is a “positive” step; it is “disappointed” with the increase in beer duty, especially given the “relatively small gains this tax will make for the Treasury”.
However, Alcohol Concern chief executive Don Shenker, says although it welcomes the move to bring duty rates on cider in line with other alcoholic drinks, the move will have “no impact on the ability of major supermarkets to absorb increased duty rates and to continue to use alcohol as a loss leader.”
“Government needs to go much further to tackle loss leading by major retailers by introducing a minimum price for alcohol,” he adds.