Wine consumption forecasts which predict strong growth over the next five years have been criticised as overly ambitious and misleading by the Wine and Spirits Trade Association (WSTA).

Ahead of this week’s Autumn Statement the chief executive of the WSTA, Miles Beale, called on the Office of Budget Responsibility to revise its wine consumption forecasts.

The forecasts published as part of the Government’s Budget in March project wine consumption in the UK is due to grow strongly by 16% in the next five years.

The figures are relied on by Government Minster’s when they determine how much to increase alcohol duty in the Autumn Statement or Budget in March.

However, the WSTA has challenged those assumptions as unrealistic and potentially misleading.

Beale said: “The OBR’s projections simply do not reflect the reality that wine businesses across the UK are facing. The industry has faced tough trading conditions for over a decade and the impact of the devaluation of the pound, the potential for higher inflation and more duty rises is set to make it even more challenging.”

“Ministers should be getting as accurate as possible information about the impact duty rises may have on UK wine businesses and their 30m wine consumers, but we don’t feel that this is the case with the existing forecasts.

“Given they will directly inform Minister’s decisions on duty changes, we are urging the Office of Budget Responsibility to take the time to review the wine consumption forecasts as part of the Autumn Statement and understand the pressure that the industry is facing at this time.”

Total combined sales of still and sparkling wine have remained broadly flat, declining by around 2% over the past 10 years, yet despite this the OBR are projecting strong growth in wine consumption of 3% a year for every year until 2021.

Additionally, the Government recently confirmed these projections do not take into account the impact of the devaluation of the pound or projected rise in inflation following the Brexit vote.

The Wine and Spirit Trade Association has calculated that the pound’s devaluation could hit the industry and its consumers with a minimum of £413m worth of extra import costs and, because the Government peg wine duty increases to inflation, a further £120m in additional duties should inflation reach 3%.

The WSTA is arguing that the combined impact of these costs and the evidence from the industry on consumption levels demand a revision in the forecasts.

This comes at a time when Ernst & Young, leading financial experts, have announced that we should expect ‘cautious revisions’ from OBR on the Autumn Statement day.

The uncertainty surrounding the nature of the UK’s departure from the UK means that OBR are likely to downgrade their forecast for GDP growth for 2017 to between 1.25% - 1.5% - down from 2.2% predicted in March.

 

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