UK trade deal benefits wiped out by duty changes, Australian wine producers say

Winemakers say planned changes announced at the last Budget would add about 40p to a bottle of wine and urged the Government to reconsider.

Simon Neville
Friday 21 January 2022 13:53
Liz Truss is in Australia to discuss trade relations (Aaron Chown/PA)
Liz Truss is in Australia to discuss trade relations (Aaron Chown/PA)

Wine producers in Australia have warned that any benefits from a trade deal with the UK will be wiped out by proposed changes to wine duties.

They say the £26 million benefit from the deal being proposed by Foreign Secretary Liz Truss who is in the country to build relations, will disappear due to £70 million extra in costs.

New rules set for introduction in February next year will see duty on wines with an alcohol content of 11.5% and above increase, and trade bodies are calling on the Government to reverse the plans.

Wine Drinkers UK, a collective of leading experts, wine producers and sellers, along with the Australian Grape and Wine lobby group, said ministers should do more on their commitment to helping the UK benefit from leaving the EU.

Chancellor Rishi Sunak announced changes to alcohol duty at the last Budget (Dan Kitwood/PA)

Tony Battaglene, chief executive of Australian Grape and Wine, said. “It is unfortunate that the result of the free trade agreement will be directly impacted by this (tax).

“We are hoping they will look at it and come to a better solution. At the moment, it is very concerning.

“This will discriminate against red wine imports. We estimate it will add 40p to the price of a bottle, and that’s a lot when you’re talking about a wine that is £5.”

A spokesman for Treasury Wine Estates added: “The proposed new alcohol duty system in the UK will significantly impact the Australian wine industry and increase costs for UK consumers.

“We understand it will wipe out the £26 million benefit for Australian wine growers agreed upon in the recent UK/Australia Free Trade Agreement, replacing it with £70 million of costs, and diminish future growth prospects in the largest export market for Australian wine growers and UK consumers.”

Chancellor Rishi Sunak announced at the last Budget that the premium tax rate on sparkling wine would be abolished – reducing the cost of a bottle of champagne.

But the changes would see duty increase on some still and fortified wines, depending on their alcohol content.

The changes will see increases to 80% of still wine, 93% of Australian wine, 95% of red wine and 100% of fortified wine, according to Wine Drinkers UK.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in