Wine prices will rise because of the new post-Brexit tax system and wipe out the benefits of slashing EU red tape, the Wine and Spirit Trade Association has warned Rishi Sunak.

The Chancellor’s decision to tax drinks on their alcoholic strength means red and white wines will get more expensive. Popular drinks such as Hardy’s Shiraz will rise by as much as 58p a bottle at a time of rising living costs.

The wine industry said the tax rise, which comes into force on Feb 1 next year, could cost drinkers up to an additional £300 million a year and dwarfed the roughly £70 million saved by scrapping EU wine import certificates after Brexit.

Miles Beale, the chief executive of the Wine and Spirit Trade Association, said: “The benefits of abolishing costly and time-consuming VI-1 wine import certification and some smaller changes to EU regulations will be blown out of the water if the Government ploughs ahead with complex, unfair and unworkable changes to the alcohol duty system.

“This is existentially worrying for wine businesses today. It would also be costly for consumers, who would see 70 per cent of all wines rise in price – 80 per cent of still wine, 95 per cent of red wine and 100 per cent of fortified wines.”

Red wine prices to rise by up to 58p a bottle

Wines will be taxed according to alcoholic strength rather than their volume of liquid or product type. The Government sees this as simpler and a way to remove an incentive for producers to increase the strength of their drinks.

Duty on sparkling wine will be cut by 25 per cent to the level of still wines, which could make a typical bottle of prosecco 87p cheaper. But the reforms will also see 47p a bottle added to Casillero Del Diablo Cabernet Sauvignon (currently £8), 19 Crimes (£9), Campo Viejo Rioja (£8) and Yellow Tail Shiraz (£7), which have an ABV of 13.5 per cent.

Red wine with 13 per cent strength will go up 35p, while 12 per cent strength bottles will go up 12p and 14 per cent wines by up to 58p.

White wines such as Hardys Crest and Yellow Tail chardonnays (both £7), which have an ABV of 13 per cent, will go up by 35p a bottle, according to industry estimates.

A Treasury spokesman said: “Leaving the EU has enabled us to reform our outdated alcohol duty system, replacing old rules with a common sense approach that puts the taxation of stronger beers, wines and spirits on an equal footing, making many wines more affordable for UK drinkers, such as English sparkling wine, which will be slashed by 64p a bottle.

“This comes on top of freezes to alcohol duty at the Autumn Budget, saving consumers £3 billion over the next five years.” 

Mr Beale accused the Government of planning new costly regulations on an industry that employs 130,000 people, is worth £11 billion annually in sales and already pays £4.4 billion in duty. 

He said the move could put the UK’s status as an international wine-trading hub at risk, adding: “It’s a mystery to us why the Government is determined to drown any potential Brexit benefits under lashings of elective new red tape.”

‘Major impact’ for British winemakers

The Government last week published its Benefits of Brexit paper, which promised to remove “burdensome EU regulations on our wine sector” and “supercharge our burgeoning English and Welsh wine industry and bolster the wine trade”.

British winemakers said the tax rises would have “a major impact” on the growing sector. 

Sam Linter, the managing director and head winemaker at Bolney Wine Estate, said: “If the Government’s current proposals for wine tax go ahead, this will stifle the growth of the English wine sector and be extremely prohibitive for our talented English winemakers.

“The economies of scale are not there for small producers, and even a 10p tax increase on a bottle of wine has a major impact on an industry which is still in its infancy compared with its European counterparts.”

David Jones, a former Brexit minister who has written to Mr Sunak about the tax rise, said: “One expects from a Conservative government that they will pursue a low tax agenda. This is going to have an adverse impact on the domestic wine industry which is now a significant player, producing some of the best wine in the world.”