The soft drinks levy, National Living Wage and potential new duty rates on cider are the key issues in today’s Budget for food and drink wholesalers, as identified by the Federation of Wholesale Distributors.
Confirming the levy on high sugar soft drinks at 18p and 24p per litre, Chancellor Philip Hammond highlighted manufacturers’ willingness to reduce sugar content in their products, but he has done nothing to address the potential for tax-evaded products to flood the market. The levy is not placed at the point of entry of high-sugar soft drinks at borders, and responsible wholesalers who pay the new tax could find themselves in competition with criminals who do not. FWD is working closely with HMRC to reduce the risk of fraudulent sales.
A consultation on a new duty rate for still ciders at just below 7.5% is welcomed by FWD, as we believe price intervention is the best way to regulate an alcohol market where voluntary schemes have not prevented very low cost alcohol being widely available in most supermarkets. As the affected ciders represent only 0.1% of the market, FWD will be ensuring any change in duty rates takes into account the deep discounting of other alcohol products by national retailers.
Next month’s rise in the adult National Living Wage to £7.50, along with the new Apprenticeship Levy, puts further pressure on low-margin wholesalers which are already facing rising product and commodity prices. Wage increases which do not reflect trading conditions are likely to result in recruitment freezes, reduction in hours, or job losses.
FWD Chief Executive James Bielby said: “Today’s Budget made no mention of the tumultuous changes to food and drink distribution what will come with Brexit. Instead it introduces changes which will disproportionately affect our members and their 400,000 retail and foodservice customers.
“We will work with HMRC to ensure that illicit product does not get a foothold in the UK soft drinks market, and that any duty rate rise for high-strength ciders is introduced in the context of equal measures to tackle irresponsible promotions in other alcohol categories.”