Ask the Collective

What pricing strategy should we use when alcohol excise duty increases?

When excise duty increases, members strongly recommend passing the full increase directly onto customers rather than absorbing it into margin. **Key points:** - **Pass on the full increase** — Members emphasise this is "the only cost increase where the buyer cannot argue about the level or source of it." In the current cost climate, absorbing any part "would be madness" and the cost would simply get lost among other rising expenses. - **Customers expect it** — Buyers will always pass duty increases onto shelf price, so you should too; they understand duty is a fixed, transparent cost. - **Example calculation** — For a 37.5% ABV spirit in 70cl, a duty increase from £28.74 to £32.82 per pure litre equates to approximately 33p per bottle, which should be passed through directly. - **Stock timing opportunity** — If advance notice of the increase is available (members mentioned February 2023 as a possible implementation date), consider moving stock out of bond ahead of the increase or negotiating bulk pre-increase purchases with customers at a slightly elevated price—they will be trying to beat the increase anyway, creating a brief window to capture additional margin. - **Price-marked packs complexity** — One member flagged that adjusting price-marked packs post-duty increase is complex and worth planning for. - **Confirm through industry bodies** — The WSTA (Wine and Spirit Trade Association) receives HMT confirmation on duty decisions; membership is recommended to stay informed on timing and implementation.