Scottish hospitality coalition urges chancellor to protect whisky industry | Whisky
A coalition of drinks, tourism and farming organizations has called on the chancellor to protect the Scotch whiskey industry from a steeper sales slump and further job losses by freezing liquor duty in next month’s budget.
The group, which includes the Scottish branches of the National Farmers’ Union, the Institute of Directors and UKHospitality, wrote to Rachel Reeves arguing that a duty freeze would be a “strategic investment” that could boost tax revenues.
They said recent increases in spirits duty had increased the total tax paid on the average bottle of whiskey to at least £12, or 70% of the retail price, contributing to nearly 1,000 job cuts in whiskey production since last year’s budget, when spirits duty increased.
“The current tax regime, combined with wider economic fluctuations, is placing significant pressure on both producers and venues,” the joint letter said. “Some businesses are halting investment or looking overseas, while others are being forced to make redundancies. This is a worrying trend for many of the UK’s most iconic products.”
The signatories, including the Scottish Convenience Stores Federation, the Night Industry Association and the Scottish Chambers of Commerce, said they represented thousands of bars, restaurants and hotels, as well as farmers who grow the barley used in whiskey production.
They argue that the high tax on spirits, including British-made products such as vodka and gin, is having a disproportionate impact on pubs and clubs.
They calculate that alcoholic beverage sales account for 38% of the hospitality industry’s profits, despite only accounting for 15% of alcohol unit sales. Data from the International Wine and Spirits Survey revealed that whiskey sales in the UK fell by 4.3 million bottles in 2024 compared to 2023.
Their appeal to the Chancellor is designed to support a campaign by the industry’s trade body, the Scotch Whiskey Association (SWA), to freeze the duty until 2029; This is a proposal that will reduce the Treasury’s options in the future.
SWA said there was evidence that the Treasury’s approach to the spirits duty was misguided. In his presentation to the Treasury before the November 26 budget, he stated that the 14 percent customs duty increase in the last two years had backfired.
The Treasury estimated that revenues from alcohol tax would increase by 18% in 2023; but has only increased 1.5% since then. Other official forecasts of 38% growth in duty revenues “have no relevance to the real world and risk further undermining confidence in HM Treasury modelling”, it said.
Industry organizations argue that inflation, rising wholesale prices and personnel costs, and falling consumer confidence are contributing to an increasingly difficult economic outlook. SWA said Britain’s spirits taxes are 97% higher than the EU average.
Liz Cameron, director of the Scottish Chamber of Commerce, said: “A duty freeze is not a handout. It is an investment in British trade, British exports and British jobs, and a chance to support one of the UK’s most successful and globally recognized industries.”
Andrew Connon, president of NFU Scotland, said: “Good quality grains grown here in Scotland are the foundation of a hugely valuable supply chain from grain to glass, delivering skilled jobs, investment and economic growth.”
The Treasury said it was clear the chancellor needed to balance public spending with supporting growth but would not comment on tax plans.
“Our distilleries are vital to the British economy, so we are making it easier for them to develop: no export duty, reduced license fees, reduced customs duties and capped corporation tax,” a spokesman said. But the Treasury did not comment on the pressures facing hospitality and farmers.
