Scottish Gin distilleries could go bust if budget hikes alcohol tax, industry experts claim

SUNDAY MAIL EXCLUSIVE: Scotland's small gin distilleries are struggling to survive a "perfect storm" of headwinds in the sector.

Dozens of once thriving small Scottish gin distilleries could go bust if alcohol tax is hiked in the budget, industry experts have warned.

Chancellor Rachel Reeves is said to be considering increasing booze duties in next month’s budget which could raise an extra £800 million as part of a plan to restore the public finances.

But Pal Gleed, director of the The Gin Guild, has highlighted the plight of around 90 small gin businesses north of the border, many of which are already fighting for survival.

He said: “It is a very concerning time for many of our members in Scotland and beyond.

“They have been hammered by a record 10per cent rise in alcohol duty on spirits last year, crippling repayments on the Coronavirus Business Interruption Loan Scheme, reduced public confidence brought on by the cost-of-living crisis and huge energy bills.

“It’s a perfect storm which has come at gin producers from all angles, and is hurting producers of all sizes.

“The last duty rise was the biggest for 50 years and has had a hugely detrimental effect.

‘We’re urging the new Labour Government to show support for our industry and not deal it another hammer blow with any further tax hits, but to reduce spirits duty.

“We worry that people are looking at the spirits industry in a very binary health focused way, and losing sight of the thousands of people who work in it, and that the vast majority of consumers are responsible consumers of alcohol.”

An industry source added: “There is a very fragile eco-system of dozens of small gin distilleries in Scotland which are teetering on the brink and many are likely to go bust within the next year.

“There is a danger that tax regimes designed understandably to punitively hit the big London based industry conglomerates could inadvertently destroy a lot of small Scottish businesses.

Scotland is responsible for 70per cent of the UK’s gin production, with many distilling premium products on a small scale.

But last year it was reported gin’s market share in pubs, bars and restaurants has now fallen below that of vodka, liqueurs and other booze after a decade long boom.

Before Covid threw the country into chaos supermarkets were eager to stock a myriad of gins from independent producers - the vast majority of which were in Scotland

Producers had taken what had previously been seen as a boring, old-fashioned spirit and reinvented it.

The boom was aided by the fact gin is far less time-intensive to make than whisky.

Alcohol duty generally rises each year in line with inflation unless the chancellor decides to freeze it.

Reeves has said that next month’s Budget will involve “difficult decisions” on tax, spending and welfare due to a £22bn “black hole”.

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