UK wine duties 'wipe out trade benefits'

UK PM Boris Johnson and Australian PM Scott Morrison heralded a free trade deal last year.
UK PM Boris Johnson and Australian PM Scott Morrison heralded a free trade deal last year.

Australian wine producers have warned that any benefits from a UK trade deal will be wiped out by proposed British changes to wine duties.

They say the 26 million pounds ($A49 million) benefit from the deal being proposed by UK Foreign Secretary Liz Truss, who is in Australia to build relations, will disappear due to 70 million pounds extra in costs.

New UK rules set for introduction in February next year will cause duty on wines with an alcohol content of 11.5 per cent and above to increase, and trade bodies are calling on the government to reverse the plans.

Wine Drinkers UK, a collective of leading experts, wine producers and sellers, along with the Australian Grape and Wine lobby group said ministers should do more on their commitment to helping the UK benefit from leaving the European Union.

"It is unfortunate that the result of the free trade agreement will be directly impacted by this (tax)," Australian Grape and Wine chief executive Tony Battaglene said.

"We are hoping they will look at it and come to a better solution. At the moment, it is very concerning.

"This will discriminate against red wine imports. We estimate it will add 40p to the price of a bottle, and that's a lot when you're talking about a wine that is 5 pounds."

A spokesman for Treasury Wine Estates added: "The proposed new alcohol duty system in the UK will significantly impact the Australian wine industry and increase costs for UK consumers.

"We understand it will wipe out the 26 million pounds benefit for Australian wine growers agreed upon in the recent UK/Australia Free Trade Agreement, replacing it with 70 million pounds of costs, and diminish future growth prospects in the largest export market for Australian wine growers and UK consumers."

UK finance minister Rishi Sunak announced at the last budget that the premium tax rate on sparkling wine would be abolished - reducing the cost of a bottle of champagne.

But the changes would result in a duty increase on some still and fortified wines, depending on their alcohol content.

Australian Associated Press