Industry leaders across the UK's alcoholic beverage sector have issued a stark warning that companies have no choice but to increase prices as a significant alcohol duty rise takes effect from Sunday 1st February 2026. The tax on alcoholic drinks will jump by 3.66%, following Chancellor Rachel Reeves' announcement in the November autumn budget that alcohol duty would rise in line with Retail Prices Index inflation.
Direct Impact on Consumer Prices
Whilst the levy is imposed directly on alcohol manufacturers, industry executives have cautioned that shoppers will feel the immediate impact through what they describe as a trickle down effect, following several years of mounting operational costs. Government figures reveal the precise financial implications for popular beverages.
Specific Duty Increases Revealed
According to official calculations, a standard bottle of gin at 37.5% alcohol by volume will see its duty rise by 38p to £8.98 after VAT. For a bottle of Scotch whisky at 40% ABV, duty will climb by 39p to £9.51. Meanwhile, a bottle of 14.5% red wine will face a 14p duty increase.
The Wine and Spirit Trade Association has highlighted that tax on a 14.5% red wine bottle has surged by £1.10 since the current alcohol duty system was implemented in August 2023. This represents a substantial cumulative burden on both producers and consumers.
Industry Response and Criticism
Emma McClarkin, chief executive of the British Beer and Pub Association, expressed serious concerns about the implications. These changes unfortunately increase the likelihood of further price rises, which no brewer or publican would want to inflict on their customers, she stated. McClarkin emphasised that brewers already pay some of the highest rates of beer duty in Europe, and this increase will add further strain to their already razor-thin profit margins.
Miles Beale, chief executive of the WSTA, offered particularly strong criticism of the government's approach. Despite the OBR at last acknowledging higher prices lead to a decline in receipts, the Government fails to recognise that its own policy is benefiting no-one, he argued. Beale highlighted the additional complexities for wine, which is now taxed by strength, creating more administrative headaches for businesses.
Broader Business Pressures
Beale further explained the cumulative effect of multiple cost increases facing the industry. Add to this all the other costs – including national insurance contributions, business rates and waste packaging taxes – and businesses have no choice but to increase prices in order to keep afloat, which unfortunately means consumers are going to take the hit once again.
The tax on beer will rise for sales in both pubs and supermarkets, marking the first time pubs have been affected since 2017. Several beer brands, including Foster's, have recently lowered their alcohol content to 3.4% in an effort to cut their duty expenses, as beers under 3.5% ABV attract significantly lower taxes following the 2023 duty revamp.
Spirits Industry Concerns
Braden Saunders, spokesperson for the UK Spirits Alliance and co-founder of Doghouse Distillery in Battersea, commented on the unfortunate timing. Just as dry January draws to a close and people contemplate their first hard-earned drink, they're met with higher prices at the bar, he noted. Saunders added that the spirits industry has been treated as a cash cow by consecutive governments, and the sector is on its knees.
The UK Spirits Alliance, representing hundreds of distillers nationwide, has written to the Chancellor calling for the upcoming duty review to stimulate growth, eliminate what they term spirits discrimination and establish a sustainable long-term strategy for the industry.
Hospitality Sector Apprehension
Allen Simpson, chief executive of UKHospitality, voiced additional concerns from the broader hospitality sector. Hospitality businesses are facing price pressures at every turn and our sector's cost burden is growing at an unsustainable rate, he explained. Simpson urged suppliers to show restraint in passing on the increased costs, recognising the economic pressure the sector is already under.
Government Justification
A Treasury spokesman defended the policy, stating: For too long the economy hasn't worked for working people, and cost-of-living pressures still bear down. That's why we are determined to help bring costs down for everyone. The spokesperson highlighted other government measures including taking £150 off energy bills, increasing the National Living Wage, and freezing fuel duty, rail fares and prescription fees.
The Treasury emphasised that alcohol duty plays an important role in ensuring public finances remain fair and strong and funds the public services people rely on every day, noting record funding for schools and the NHS. However, industry representatives remain unconvinced, warning that the duty increase will ultimately be borne by consumers through higher prices at bars, pubs, restaurants, and supermarkets across the country.
