THE cost of a bottle of wine could rise by a pound as inflation soars to a 40-year high.
The Treasury could be set to introduce a change to duty rates announced by Rishi Sunak last year based on the strength of alcohol.
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The move – expected to be finalised within weeks and come into force next year – would see a small drop in price of beer and cider bought on tap and abolish the super-tax on sparkling wine, prosecco and champagne.
But the wine industry warned the changes could knock on an extra few bob on bottles with an alcohol – or ABV – level about 11.5 per cent.
The plans have also been slammed for being too complex because they set tight 0.5 per cent bands for a drink’s ABV, which is difficult to pull off precisely in wine.
No 10 is facing calls to ditch the move with Aussie producers arguing they’re disadvantaged because their soil and grape types make their wine stronger.
Treasury Wine Estates (TWE), the biggest supplier from Australia to the UK, says duty on its products is likely to to go up 10 per cent.
They predicted the price of a Lindeman’s Shiraz could rise a whole 58p to £7.83 and a bottle of Hardy’s Crest Cabernet Shiraz Merlot up from £7 to £8.
Tony Battaglene, chief executive of industry group Australian Grape and Wine, said: “It’s unfortunate that the results of the free trade agreement will be directly impacted by this tax.
“Under the new system, 93 per cent of wine exported from Australia will be impacted and the cost to Australian wine makers is estimated to be AUD$143 million.
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“While we accept the sovereign right of the UK government to change their tax system, UK consumers are the big losers.
“One of the benefits of a free trade deal was meant to be more affordable Australian wine – that won’t be the case under the Government’s current proposal.
“Consumers across the UK will be paying more for their favourite bottle of Australian wine.”
A spokesperson from HM Treasury said: “Our reforms will replace our outdated rules with a common-sense approach that puts the taxation of stronger beers, wines and spirits on an equal footing, making lighter and sparkling wines more affordable for UK drinkers.
“This comes on top of freezes to alcohol duty at the last three budgets, saving consumers £5.7billion in total.”
Asked about the duty reforms in the Commons earlier this week, Treasury minister Helen Whately said: “We have set out our plans to make alcohol duty simpler and fairer – a change that is long overdue.
“That includes a new relief for draught beer, small producer relief for craft cider makers and the end of the higher rate for sparkling wine.
“I am listening to the sector and I have visited businesses to hear for myself, to make sure that the reforms work in practice.”
