Upturn after years of decline

Lift in whisky sales adds to case for tax cut

David FrostScotch Whisky sales in the UK are growing following last year’s tax cut and the upturn is being used by the industry to call for a further reduction in duties.

Figures from HM Revenue and Customs (HMRC), published today by the Scotch Whisky Association, reveal the number of 70cl bottles of Scotch released for sale increased by 2% last year. Some 84.9 million bottles were released for sale in 2015, up from 83.3m the previous year.

The moderate increase in volume of Scotch sold in the UK recently comes on the back of years of decline. The number of bottles released for sale in the UK has fallen by around a quarter in the last 10 years. In 2005 more than 107m bottles were sold, but volumes have never exceeded 100m in one year since 2008.

The SWA said the 2% cut in excise duty in last year’s UK Budget, on the back of a freeze and the scrapping of the alcohol duty escalator in 2014, has given a confidence boost to the industry.

However, it says the UK drinks market remains “fiercely competitive” and the current level of tax, including excise and Vat, of 76% on an average priced bottle of Scotch Whisky is still too high.

The SWA is calling for ‘Fair Tax for Whisky’ with a further 2% cut in excise in the UK Budget on 16 March, a move that it claims is supported by three-quarters of the British public.

Last year’s excise reduction – only the fourth time in the last century that duty on Scotch has been cut – has also boosted Treasury coffers by contributing to a £102m increase in revenue receipts from spirits.

David Frost (pictured), SWA chief executive, said: “A strong UK market is vital, particularly for new entrants to the industry. In the last two years, nine new distilleries have started production in Scotland and they need a strong domestic base to grow from.

“The UK is still the third biggest market for Scotch in the world, but it is fragile and competitive. That’s why we want Chancellor George Osborne to support an important domestic industry by cutting duty by a further 2% next month.

“The tax treatment of Scotch in its home market also has repercussions for our export performance. If overseas governments see Scotch being treated unfairly in the UK that could influence their decisions.

“This makes it harder to ensure a level playing field for Scotch overseas.  With Scotch now the biggest net contributor to UK trade in goods, it is important the Chancellor acts to support distillers and therefore the wider economy.”

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