On 1 August 2023, wine sold in the United Kingdom (UK) started being taxed on the level of alcohol in the product, rather than by volume. This has already had an impact on the level of alcohol in wine sold in the UK, including Australian products. This Market Bulletin will give an overview of the duty changes and how they are already impacting on exports and retail sales.
Overview of duty changes
Before August 2023, wine was taxed at a flat rate of £2.23 per 750ml bottle for still wine, for wines between 8.5 and 22 per cent alcohol. Following the UK Alcohol Duty Review, wine started being taxed by the strength of alcohol as per the label of the product[1]. A temporary easement was introduced as a transitional arrangement for wine between 11.5% and 14.5% ABV, with all wines in this bracket being charged with the same modelled duty rate of £2.67 per bottle (in essence assuming that these wines had an ABV of 12.5%).
This easement ended on 1 February 2025, and all rates also increased in line with the forecasted Retail Price Index (RPI) inflation rate (see Figure 1). Wine Australia’s United Kingdom Export Market Guide gives more information about these changes (available for levy-payers and exporters).
Figure 1: UK duty rates on wine (modelled for a 750ml bottle)
| Strength (ABV) | Duty Payment until 31 July 2023 (Still Wine) | Duty Payment until 31 January 2025 (All Wine) | Duty Payment until 1 February 2025 (All Wine) |
|---|---|---|---|
| 15.00% | £2.23 | £3.21 | £3.32 |
| 14.50% | £2.23 | £2.67 | £3.21 |
| 14.00% | £2.23 | £2.67 | £3.10 |
| 13.50% | £2.23 | £2.67 | £2.99 |
| 13.00% | £2.23 | £2.67 | £2.88 |
| 12.50% | £2.23 | £2.67 | £2.76 |
| 12.00% | £2.23 | £2.67 | £2.65 |
| 11.50% | £2.23 | £2.67 | £2.54 |
| 11.00% | £2.23 | £2.35 | £2.43 |
| 10.50% | £2.23 | £2.24 | £2.32 |
The UK’s importance as an export market for Australian wine
The UK is the largest export market for Australian wine by volume, contributing 33 per cent of total volume exported in the 12 months to December 2024. In this period, 212 million litres were shipped from Australia to the UK, worth $352 million in free on board (FOB) terms.
The UK ranks second in export value, with 89 per cent of exports shipped in bulk containers to be packaged in market. Since packaging costs are not included, the reported export value is lower. If the average value of packaged exports to the market was applied to these bulk wine exports, exports to the UK would be worth well over $1 billion per year.
It should also be noted that some exports to the UK are packaged there but then on-shipped and sold in other European markets.
Impact of duties on exports
Between 2022 (before the changes to duties were implemented) and 2024, the total volume of Australian wine shipped to the UK has declined by just 2 per cent however the level of alcohol in the exported products has changed.
As illustrated in Figure 2, the average level of alcohol in still red and white products exported to the UK has dropped over the last two years. Prior to the changes in duty, the average level of alcohol in still red wine was 13.6 per cent and white wine’s average was 12.6 per cent. These levels have now dropped to 12.8 per cent for reds and 11.8 per cent for whites, a 6 per cent drop in alcohol content for both styles (compared with a 1 per cent decrease in alcohol content for Australian wine exports globally over the same period).
Figure 2: Average ABV of Australian wine exports to the UK
In 2022, less than 5 per cent of Australian wine exported to the UK was below 11.5 per cent in alcohol content. In 2024, that share has grown to 42 per cent. Exports between 11 per cent–11.49 per cent ABV have increased in share from 4 to 36 per cent of exports (see Figure 3). This shift has occurred in both red and white wine. This segment now has a 21 per cent share of still red wine exports (with almost no volume of red wine with this level of alcohol shipped in 2022), while 53 per cent of still white wine now sits within this segment (8 per cent in 2022).
Figure 3: Share of export volume to the UK by ABV
Impact of duties on retail sales
According to off-premise sales data from Circana, Australian wine is the number one source of wine in the UK off-premise channel and has a 24 per cent market share by volume[2]. Australian wine sold in the UK off-premise in the 12 months ended December 2024 skewed only slightly higher in alcohol than total still wine sales, due to a higher share of Australian products selling between 13.5 and 14.49 per cent ABV (see Figure 4).
Figure 4: Share of sales volume by ABV, Australia vs total
Source: Circana
Australian wine as a category tends to have higher alcohol content mainly because 52 per cent of Australian wine sold in the UK off-premise is red, compared to only 40 per cent of total wine sales. Red wines are generally higher in alcohol content than whites.
Retail figures lag slightly behind export figures in showing the trend towards lower alcohol. In the last 12 months the share of wine sales below 11.5% ABV has risen by about 3 percentage points for both Australian wine and total still wine (see Figure 5).
Figure 5: Change in ABV in UK off-premise, Australia vs total
Source: Circana
If no adjustments are made to the level of alcohol in a product – and the increased duties are not absorbed somewhere along the supply chain – the average price of wine can be expected to increase. The average value of still wine sold in the UK off-premise rose by 4 per cent in the 12 months to December 2024 – to £6.79 per 750ml equivalent.
Wine Australia’s FOB to retail calculator has been updated with the latest duty changes, to help exporters estimate the change in retail price of their products (assuming all other factors are held constant).
[1] The duty is charged on the volume of pure alcohol in a product, not at a per bottle or case rate.
[2] Further topline results for the UK off-premise can be found in the UK off-trade wine sales report (for levy-payers and exporters).