FDBusiness.com

The UK market for Scotch whisky declined by 3% last year at the same time as annual above-inflation excise duty increases continued to pile pressure on the industry. Figures just published reveal that the number of 70cl bottles of Scotch whisky released for sale in the UK fell to 87.5 million in 2013 from 90m the previous year.

The Scotch Whisky Association (SWA) says this is further evidence that the alcohol duty escalator, introduced in 2008, is damaging a domestic industry that is vital to the economy. The industry supports 35,000 jobs and is vital to many fragile rural and urban communities. The escalator means that duty has increased by 2% above the rate of inflation each year since 2008. Tax on Scotch whisky has risen by 44% over five years.

Some 79% of the average price of a bottle of Scotch is now made up of tax and VAT.

The SWA is asking Chancellor George Osborne to ‘Call Time on Duty’ in the forthcoming Budget statement (19 March). It is calling for the alcohol duty escalator to be scrapped and duty frozen. The SWA says this would be fairer on the industry and hard-pressed consumers, as well as boosting public finances.

Since the escalator was introduced, the UK market for Scotch whisky has declined more than 15% in volume from 103m bottles in 2008. Some 16m bottles of Scotch have been lost from the domestic market in the last five years.

In last year’s Budget, the escalator was removed from beer and duty was cut. Whisky drinkers now pay 48% more duty than beer drinkers for the same amount of alcohol. The ‘Call Time on Duty’ campaign wants the escalator scrapped on all alcohol and duty frozen.

David Frost, Scotch Whisky Association chief executive, says: “It’s obviously disappointing to see this decline in Scotch whisky volumes in our domestic market. In next week’s Budget the Chancellor has the perfect opportunity to support a vital Scottish industry. He should scrap the unfair alcohol duty escalator and freeze duty this year. This move would also benefit consumers and public finances.

“Since the introduction of the escalator in 2008, the UK market for Scotch Whisky has shrunk by more than 15%. Fairer tax treatment would help address this decline in theUK. It would send the right message to overseas governments in markets where imported products, such as Scotch whisky, face discrimination. It would also reflect and support the UK’s drive for export-led growth.”