Trade bodies supporting the UK’s spirit industry are calling on the new Labour government to reverse the alcohol duty hike introduced last year.
Amid a growing craft scene but decreasing sales, industry representatives said the tax “sucked the energy out of a booming sector”.
Duty relief
Last year’s Spring Budget saw then-chancellor Jeremy Hunt announce a 10.1% duty hike on spirits, which was introduced 1 August 2023. This decision was heavily criticised by the industry.
The Wine and Spirit Trade Association, which represents over 300 companies across the industry’s supply chain, called on the next government “to support domestic industry to allow them to invest, grow and boost exports.”
“This support would best come from keeping duty rates down. The previous government’s 10% duty hike on spirits and 20% increase on wine duty was the biggest rise in UK duty rates in almost 50 years.”
A spokesperson for the UK Spirits Alliance, which represents 280 distillers, echoed this sentiment, saying that the decision has “sucked the energy out of a booming sector”.
They added that the duty has increased inflation and put pressure on an already struggling hospitality sector.
The corresponding drop in demand has also suppressed demand and hit Treasury coffers, with tax revenues down £108m since between August 2023 and May, compared to the previous year’s figures.
“The UK’s rum distillers want to innovate and export – and raise the spirits of the nation. But they can only thrive if supported by a stable, fair tax regime.
“The new government must back spirits if we are to remain a key exporter in this innovative and iconic sector.”
UK industry
Mirroring the wider UK alcohol industry there’s been a steady growth in the number of craft distillers in recent years, with Decanter magazine reporting as many as 70 operating across the nation, from Kent to the Orkneys.
Despite being a larger importer of rum – both whiskey and gin are exported in higher quantities – the UK is nonetheless is frequently a top-10 exporter worldwide.
This is thanks to the prominence of British drinks company Diageo, with Captain Morgan rum one of their leading international sellers.
Rum trade
Beyond the UK, global trade grew an impressive 12% growth between 2021 and 2022, reaching US$2bn. This was led by Italy’s $226m in exports, followed by the US and Dominican Republic, which didn’t cross the $200m threshold.
However, production is still firmly rooted in the Caribbean, with Puerto Rico boasting the world’s largest distillery and dubbed the ‘Cathedral of Rum’ by the island’s first governor, Luis Muñoz Marín. Opened by the Bacardi family in the 1950s, the 138-acre plant in Cataño supplies the greatest amount of rum consumed globally, while also serving as a historic landmark and museum.
The Caribbean is home to other renowned distilleries, with Mount Gay in Barbados, a brand now owned by France’s Rémy Cointreau, having been operating since 1703.
History
A spirit for those with a sweet tooth, rum is made from a base of sugarcane, typically molasses, while also packing a boozy punch, with an alcohol content varying between 40% and 75% ABV.
Rum varies by colour based on how long they’ve been aged, with white rums bottled after distillations, while gold or dark varieties mature in oak barrels, like whiskeys.
The alcohol originated in the Caribbean, with the first recorded mentions of rum coming from Barbados in the 1650s, where it was referred to as “kill-devil” or “rumbullion” before being shortened to just ‘rum’.
The drink’s early history was checkered, with global growth connected to the transatlantic slave trade, as slaves brought from West Africa were traded in the West Indies for molasses, which was then used to make rum in New England, before being traded in West Africa.
The drink of the American Revolution, not only was rum the US’ most popular spirit at the time, but Britain’s tax on sugar and molasses partly incited the war.
In the popular imagination, rum is still associated by many with pirates, and it was from the mid-17th century that it overtook wine and ale as the seafarer’s tipple of choice.