AS I SEE IT: TERRY MURDEN says the whisky sector is missing the point of the new duty regime
Global whisky company Diageo joined the industry’s cheerleader to condemn the new duty regime introduced by the UK Government which will see a hike in the price of spirits. Diageo’s new CEO Debra Crew and Scotch Whisky Association boss Graeme Littlejohn described it as a “hammer blow”. Well, they would, of course, but their criticism misses the point.
The changes in the duty regime see the tax burden of Scotch rise from 70% to 75%. It will mean that £11.40 is collected in taxation through duty and VAT from the average £15.22 price of a bottle.
Whisky leaders say that imposing the highest tax burdens in the G7 sends the wrong signals to other countries that are being urged to cut their own taxes in order to help one of the UK’s biggest exports. That’s always been a fair point, though the data for overseas sales suggest tax has not deterred demand. In the year to the end of June, Diageo – owner of Johnnie Walker, Scotland’s biggest brand – delivered strong growth in four of its five regions, with Europe and Asia reporting double-digit advances.
The new duty regime was designed to shift the weighting from category to alcoholic strength, a move that is long overdue if the country is to make a meaningful impact on the effects of strong drinks on people’s health. It explains why the Scottish Government, which wants to raise the minimum unit price of alcohol, chose not to share the complaints of one of Scotland’s biggest industries. Anything that persuades drinkers to move to lower or non-alcoholic drinks is fairer on the consumer who should not be paying the equivalent of strong drink that contains barely any alcohol.
The changes also help pubs selling beer and other drinks on tap, by reducing the price over that paid in supermarkets who are rightly blamed for the rise in drinking at home. Some years ago a whisky boss told me how encouraging consumers to drink in bars would improve the health statistics because in these locations drink is sold in controlled measures.
As for Ms Crew, she was complaining about higher duty charges while proclaiming the consumers’ growing enthusiasm for premium products. Those at the top end of the market clearly don’t let the amount of tax they’re paying stop them buying luxury brands. Other companies in the Scotch category, such The Artisanal Spirits Company, are seeing similar trends.
Nor did Ms Crew’s “hammer blow” warnings trouble investors too much. Shares of Diageo added 10.5p to close at 3408p.
Ferry naming
Caledonian Maritime Assets Limited (CMAL) is calling for the public’s help to decide the name for Hull 802, sister ship of Glen Sannox, both of which are under construction in Ferguson Marine (Port Glasgow).
This will send social media into a frenzy. The fiasco over the ferries has been one of the biggest political topics of recent years. There will be no shortage of naming suggestions.
How about Sturgeon’s Folly or Ferry expensive?
The officially shortlisted names are:
- Glen Cloy – A small valley on the east coast of Arran
- Glen Rosa – A glen near Goat Fell on Arran in the Firth of Clyde
- Claymore – The word ‘claymore’ comes from the Gaelic claidheamh mòr, meaning ‘great sword’
Voting is open until midnight on Wednesday 23 August.
Terry Murden held senior positions at The Sunday Times, The Scotsman, Scotland on Sunday and The Northern Echo and is now editor of Daily Business
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