Wine producers in Australia have warned that any benefits from a trade deal with the UK will be wiped out by proposed changes to wine duties.
They say the £26 million benefit from the deal being proposed by Foreign Secretary Liz Truss, who is in the country to build relations, will disappear due to £70 million extra in costs.
New rules set for introduction in February next year will see duty on wines with an alcohol content of 11.5% and above 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 EU.
Tony Battaglene, chief executive of Australian Grape and Wine, said. “It is unfortunate that the result of the free trade agreement will be directly impacted by this (tax).
“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.”
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 benefit for Australian wine growers agreed upon in the recent UK/Australia Free Trade Agreement, replacing it with £70 million of costs, and diminish future growth prospects in the largest export market for Australian wine growers and UK consumers.”
Chancellor 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 see duty increase on some still and fortified wines, depending on their alcohol content.
The changes will see increases to 80% of still wine, 93% of Australian wine, 95% of red wine and 100% of fortified wine, according to Wine Drinkers UK.