New Glass Tax Leaves UK Drinks Trade in Confusion

From this year, British drinks businesses have to pay an environmental levy whose cost remains unknown.

Reading time: 2m 45s

Image of UK tax collector with empty bottle and hand open for payment (generated by AI, DALL_E)
Image of UK tax collector with empty bottle and hand open for payment (generated by AI, DALL_E)

Increases in excise duty and the introduction on February 1, of a highly complex system based on ABV have made the UK a less attractive market for would be wine exporters.

A new additional cost will also have to be taken into account that has been widely overlooked, and is causing even more concern to UK businesses. Only weeks before its application, nobody knows how much it is going to cost. As Miles Beale chief executive of the Wine and Spirit Trade Association (WSTA), said “EPR fees are due from 1 April 2025, and many businesses will have already negotiated contracts and set their prices for the next financial year.”

The new EPR - Extended Producer Responsibility – levy is intended to increase the focus on environmentally-friendly packaging. Initially, it will apply exclusively to glass and will be based on a cost per tonne, with fees that are yet to be established but, according to the government’s own varying estimates, could range from £115 ($143) per tonne to twice that figure. Consumers are expected to cover 80% of whatever the final figure turns out to be but, at present, businesses are operating in the dark. The first bills from the government will fall due in October of this year, covering the previous six months.

Wine and spirits businesses will be the heaviest hit, with retail prices rising by an estimated £0.10 ($0.12) and £0.12 ($0.15) respectively, followed by soft drinks at £0.6.6 ($0.8).
 

Plastic and aluminium off the hook

If the muddled introduction has infuriated UK drinks firms in every sector, so too has the delay in applying the levy to plastic and aluminium until 2027. This is seen as giving those forms of packaging an unfair advantage. Soft drink manufacturers that continue to hold out against switching to PET are suggesting that the new levy could jeopardise their commercial viability.

Wine businesses have complained loudly too. Over 80 wine and spirits firms wrote letters to the government, to express in their own words the sentiments of Simon Doyle, UK manager of Concha y Toro: “It is critical… [to] listen to the legitimate concerns of the wine industry and take stock of how much more effective implementation could be if due time were given to work collaboratively to find a sustainable and manageable way forward. Alongside duty reform, this new government couldn’t have a clearer opportunity to put into practice its claims of listening and wanting to remove bureaucratic barriers to business.” 

News

From February 1, 2025, British wine drinkers will pay more excise duty on their wine than any of their neighbours in Europe.

Reading time: 2m

Hospitality businesses may pay twice

Further complaints have come from the on-trade which commonly pays to have large volumes of empty bottles removed. The imposition of EPR on their purchases means that they will be charged twice.

As with calls to rethink the new excise duty scheme, these pleas for the levy to be delayed, and/or for it to be applied equally have fallen on governmental deaf ears so, logically, wine businesses packing in the UK will, more than ever, be looking at the lightest possible glass formats and possibly more PET and cans for the brands where this is thought appropriate.

Producers who do their packing in their own regions may be less likely to change their format to suit the specific requirements of the UK unless it is one of their biggest markets, but some may see these environmental taxes in the context of the Nordic monopolies’ drive towards listing products with smaller carbon footprints.

However, like Scotland’s expensively bungled and abandoned/postponed bottle Deposit Return Scheme (DRS), and the UK-wide model that has been pushed back to 2027 and will now exclude glass, Britain’s efforts to apply green thinking to its drinks packaging leave much to be desired.

And many businesses in a state of financial confusion.

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Robert Joseph considers the ways in which consumers may be driven to buy more locally-produced wines, with lower alcoholic strengths.

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