Introduction

Change is afoot in the UK wine market, and it’s not just about the latest vintage trends. The government has revamped the alcohol duty system, ditching the old flat-rate tax for a structure that considers alcohol by volume (ABV). If that sounds like a dull bureaucratic shuffle, think again—this shift will have real-world implications for wine businesses and consumers alike. So, let’s uncork the details and see what’s really in the bottle.

Recent Changes to UK Tax Law Related to Wine

As of 1 February 2025, the UK government has waved goodbye to the “easement” period, which had provided a temporary tax relief for wines between 11.5% and 14.5% ABV. Previously, these wines were taxed as though they were 12.5% ABV, regardless of their actual alcohol content. That blanket approach is now history. Instead, wine duty is now calculated based on precise ABV levels, meaning different tax rates for different strengths.

While UK law allows for ABV labelling in 0.1% increments, winemakers are only obliged to declare their wines in 0.5% intervals. That means a bottle labelled 13.5% might actually be anywhere between 13.1% and 13.9%—a small but crucial detail that helps reduce administrative headaches.

On top of these changes, alcohol duty rates have also risen in line with inflation, making for what the Wine and Spirit Trade Association (WSTA) has dubbed a “double tax slam.” And it’s not just wine feeling the pinch—spirits like gin have seen duty hikes too, adding an extra 32p to a bottle.

The Impact on Wine Businesses

For wine merchants, importers, and producers, this new tax system introduces a host of challenges:

1. Increased Administrative Work – Calculating duty for each wine based on its ABV adds another layer of complexity. Businesses now need precise data on every wine they stock, which is no small feat for those with extensive portfolios.
2. A More Homogeneous Market? – The added tax burden may lead to a narrowing of available wines. Importers and retailers could streamline their offerings to minimise costs and simplify logistics, meaning consumers may find fewer options on the shelves.
3. Financial Pressure – With rising duty rates and inflation already squeezing margins, businesses have two choices: absorb the extra cost or pass it on to consumers. Either way, it’s a difficult balancing act.
4. The UK Losing Its Appeal? – As one of Europe’s most expensive places to buy wine, the UK may become a less attractive market for international producers. If suppliers look elsewhere, variety and availability could take a hit.

However, it’s not all doom and gloom. The government has introduced a couple of incentives that could work in the industry’s favour:

• Draught Relief – Duty on draught wines (yes, those served straight from the keg in pubs) is down by 1.7%, creating an opportunity for more wine on tap.
• Small Producer Relief – UK-based micro-producers making lower-ABV wines could benefit from reduced rates, encouraging local winemaking innovation.

How Will Consumers Be Affected?

What does all this mean for wine drinkers? In short, expect to pay more and potentially see a shift in what’s available.

• Price Hikes – The WSTA estimates that a bottle of 14.5% ABV red wine could jump in price by around 80p thanks to the combined impact of ABV-based duty and inflation.
• A Shift to Lighter Wines – Since higher-strength wines now carry a heavier tax burden, consumers may gravitate towards lower-ABV options. The market could see a rise in mid-strength wines (7-11% ABV), either naturally lighter or partially dealcoholized.
• Less Variety – If businesses cut down on their selections to manage costs, some favourite wines may become harder to find.
• More Cost Considerations – On top of the duty changes, the upcoming Extended Producer Responsibility (EPR) scheme could add another 12p per bottle, further inflating prices.
• Public Health Benefits? – While the tax hikes may sting, they could encourage lower alcohol consumption—an outcome that aligns with government health goals. But whether it truly changes drinking habits remains to be seen.

The Industry’s Verdict

Not surprisingly, the wine industry isn’t raising a toast to these reforms. The WSTA has been particularly vocal in criticising the end of the easement period, warning that it creates an unnecessary burden on businesses while offering little benefit to consumers. Winemakers, too, have expressed concerns about ABV precision, as alcohol content can fluctuate slightly due to natural variations in fermentation.

On the flip side, the government argues that the new system is fairer, treating all alcoholic beverages the same way and encouraging healthier consumption habits. Meanwhile, the Society of Independent Brewers has welcomed the draught relief, seeing it as a positive step for on-trade wine sales.

Conclusion

The UK alcohol duty reform has set the stage for a new chapter in the country’s wine industry. While the government aims for a “simpler” and “fairer” system, businesses are facing rising costs, more admin, and a shifting market landscape. Consumers, in turn, are likely to pay more and see a gradual change in their wine-buying habits.

The bigger picture? Expect to see more lower-alcohol wines on the market, as producers and retailers look for ways to sidestep higher tax rates. The UK’s position as a prime destination for diverse global wines could also be at risk, depending on how international suppliers respond.

For businesses, the key to survival will be adaptability. Embracing technology to manage the extra admin, exploring new product categories, and making the most of the small producer and draught relief incentives will be essential. Meanwhile, consumers will need to decide whether they’re willing to pay more for their usual favourites—or if they’ll start seeking out lighter alternatives.

One thing’s for sure: the UK wine market will never be quite the same again. Cheers to that—or should we say, commiserations?