Following our previous update, Australian Grape & Wine has continued to work with the sector, Government, and international colleagues to advocate on behalf of Australian wine for changes to the proposed UK tax reforms. This included:
• Coordinating Australian wine company responses and agreement on common Australian wine sector messaging;
• Briefing Australian Government Minister’s and others on the potential impact of these changes and encouraging their direct engagement with their UK counterparts;
• Media engagement;
• Working with Wine Australia and Federal Government departments to coordinate messaging and representations to the United Kingdom;
• Working with the UK Wine and Spirits Trade Association, Wines of Great Britain, and other international colleagues to coordinate positions.
In April 2022, Australian Grape & Wine continued to work with the sector to clarify a consensus industry position on the UK duties issue. Our position, which we strongly encourage the UK Government to consider prior to the release of draft legislation, is as follows:
Acknowledging the variability of alcohol content by volume (ABV) in wine production, the proposed:
• 0.5% ABV bands should be expanded to a minimum of 1 per cent ABV for wines with an ABV of between 8.5% and 22%; and
• duty rate payable should be applied at the ABV stated on the wine label.
Key points – Rationale for the Australian position
• Actual alcohol content can vary significantly between individual batches and vintages of the same wine, creating significant issues in administering different duty tax and product prices for retailers. Larger volume blends/labels can be produced across multiple batches, each with slightly different composition in order to maintain the desired taste and aroma profile. These blends may vary in alcohol content up to 3 times in the course of 12 months.
• UK alcohol duty is currently applied to the declared ABV strength of the wine, or the ABV reported by the producer on the label and packaging. Australian Grape & Wine strongly supports the UK Government continuing to allow producers to apply duty based on the label ABV. It would be technically unfeasible and administratively burdensome to propose any alternative approach.
• While the proposed band of 0.5% on wine is in keeping with strict EU tolerances of ±0.5% on any beverages made from grapes, this is out of step with other wine-producing nations. Prior to 2010, the label tolerance for Australian wine in the EU was 0.5%, and it was negotiated to 0.8% with the Australia – EU Agreement on Trade in Wine. Further, the EU tolerances are out-of-step with nations such as South Africa and Canada (labelling tolerance of ±1%), and the US (±1.5% for <14% ABV wines and ±1.0% for >14.01% ABV wines.
Australian Grape & Wine is confident that this consensus position will enable the UK Government to meet the principles and objectives outlined in its review of alcohol duties consultation paper, while ensuring Australian winemakers are not subject to technically unfeasible administrative requirements. We encourage the UK Government to consider the issues of band size and labelled tolerance prior to the publication of draft legislation and would welcome the opportunity to provide technical briefings or any other assistance at their request.
Earlier in May 2022, Tony Battaglene also travelled to London to meet with Government and Industry contacts advocating for the Australian wine sectors’ common interests. These meetings were productive, however it remains to be seen what the UK Government position will be as we await the release of the draft legislation.
