While some hoped UK polls were as inaccurate as the country’s infamous 1970 election*, for most voters, a landslide Labour victory today (5 July) was predictable.
Businesses this morning have hailed the country’s new leader, Sir Keir Starmer, and his Labour Government, as a “fresh start” for the country and a sign of stability following 14 years of Conservative rule.
Others are wary, or realistic, about the prospects for change following the bluster of a General Election.
Later today, Sir Keir will visit King Charles III at Buckingham Palace in London, who will invite him to form the next UK government and become Prime Minister.
Since the last General Election in December 2019, the UK drinks industry has faced some of the toughest economic conditions seen for decades. It has seen a global pandemic decimate the on-premise, while the war between Russia and Ukraine and an ongoing conflict in Gaza has wreaked havoc on supply chains and driven inflation through the roof.
Domestically, the outgoing Conservative Party has faced a slew of controversies around staff conduct and its handling of the pandemic, to name but a few. Sir Keir will be the fourth Prime Minister to walk through the doors of Number 10 in just two years.
But what do we know so far about Labour’s plans for the food and beverage industry?
The Labour Party manifesto
Manifestos, by their nature, provide headline fodder on the big issues rather than granular handbooks on party policy.
Ahead of the election, Labour announced its Child Health Action Plan initiative, containing a number of measures to improve children’s well-being. The plan included a pledge to ban the sale of high-caffeine energy drinks to teenagers.
The plan also set out a (long-held) commitment to tackle childhood obesity by implementing a 9pm watershed for so-called junk food advertising aimed at children, and a ban on paid-for advertising of less-healthy foods targeted at children online.
But the manifesto also focused on big-ticket issues such as skills, labour (with a small ‘l’) immigration and trade deals – important issues for the food and beverage sector.
Spirits industry reaction
The Scotch Whisky Association (SWA) today welcomed the incoming Prime Minister, citing his promise last year to “back Scotch producers to the hilt”. It hopes Labour will reduce taxes and initiate trade deals that will benefit Scotch in export markets.
“There is much the new government can do to back Scotch whisky producers – from reducing the tax burden on spirits in the UK to protecting our industry from tariffs in key global markets,” SWA CEO Mark Kent said.
“During the rest of 2024, there will be opportunities to support Scotch in the first budget of the new parliament, secure a trade deal with India which will reduce tariffs on Scotch Whisky in this key market, and work closely with the industry as we continue on our journey towards net zero.”
Meanwhile, London-based spirits producer Doghouse Distillery said it was “very worried” about the incoming government’s impact on an already-struggling spirits industry, calling the Party “short-sighted”.
“It is easy to label drinking and having a good time as a ‘discretionary expense’,” said founder Braden Saunders. “What they don't realise is it isn't discretionary but an essential part of the culture and a mediator for many people's mental health, in moderation of course.
“We make premium spirits and so generally get the rough end of the stick in difficult times as people buy down in price point.
“We are very much in the most difficult times of our life as a business. What we need is government support through rebates for low-volume producers to encourage our cashflow in order to grow, and therefore employ more people, pay more duty and ultimately inject more taxes and jobs into the economy. This is true in many industries.”
Wine industry say
Alcohol-tax reforms by the Conservative Government have caused widespread concern, particularly in the wine industry.
Speaking to Just Drinks at Imbibe Live earlier this week, Wine and Spirit Trade Association (WSTA) CEO Miles Beale said the now former Prime Minister Rishi Sunak had “just made life much more difficult” for the industry during his time in office.
The UK introduced an interim system last year which saw alcohol taxed incrementally based on strength – with lower taxes on lower-abv alcohol, and higher taxes on higher strengths. It would mean wine producers potentially paying different taxes on each wine each year if the abv differed between two vintages.
This system is currently in a transition phase, due to end in February, an interim system Beale and the WSTA hope will remain in place.
“If urgent action isn’t taken to halt unnecessary changes to taxing wine and to clear up confusion over waste packaging regulations – businesses will be suffocated by complex and costly administration,” Beale said in a statement today.
He said the incoming changes to wine duty in February “could be fatal for some businesses, especially SMEs”, adding they will result in further price rises for consumers.
However, the WSTA this morning hailed a “fresh start” for the UK with the election result.
“It feels like a fresh chapter and a chance to move away from the increasingly disconnected and heavy-handed approach of the previous government towards a closer and more collaborative working partnership with Labour,” Beale said.
“Labour has pledged to support business with a stable policy environment and an approach to business taxation that allows long-term planning.”
Trade body WineGB this morning said there was “much to do to support our sector” and called upon Labour to “accelerate the growth of our industry to provide greater value to the UK”.
It said “significant infrastructure constraints” in the UK prevented the industry from maximising its 2023 harvest and called for the government to “address the competitive disadvantages that English and Welsh wine faces in terms of domestic regulation and production costs”.
In its Manifesto For Growth, released last month, the trade body for English and Welsh wines also called upon the incoming government to introduce a “fairer” tax regime and “reverse unworkable changes” to the wine excise duty system. It asked for a reduced duty on wine and further support for small producers, as well as support boosting tourism domestically and UK wine’s presence in export.
Today, CEO Nicola Bates said: “We seek to grasp this opportunity for sustainable growth including an export-led approach, which will require a fairer business platform; an improved environment for sustainability, planning and infrastructure; and valuing British wine.”
Beer and cider expectations
In March, the UK government extended a freeze on alcohol duty by six months to early 2025. The Society of Independent Brewers and Associates (SIBA), has said “fairness in taxation” is a key concern for the whole hospitality sector, as well as drinks, in the new administration.
Andy Slee, CEO of SIBA, said “despite the positive changes in the alcohol duty system, beer remains one of the most taxed sectors in the economy”. SIBA is pushing for the alcohol duty freeze to be made permanent.
SIBA is also calling for an increase in the Draught Duty Relief, a tax discount for draught drinks, including beer, sold in pubs. It means alcoholic products packaged into containers larger than 20 litres and below 8.5% abv qualify for a 9.2% lower duty rate. SIBA has urged the new UK government to increase this discount to 20% to “encourage people to support their local community pub and drink in a supervised environment instead of at home”.
UK non-alcoholic beer producer Big Drop said it can sum up its hopes for the new government in one word: “stability”.
“There are broader economic undercurrents which most businesses want a government to look at: interest rates, energy costs and the availability of skilled labour,” CEO Rob Fink told Just Drinks.
“But many good businesses can plan around these things if they have a government which provides a background of certainty, assistance and stability. And that just hasn't been the case for many years.”
Fink said as a relatively young business, investment is a key success factor. He hopes Labour can “bring a sense of renewed optimism” to the UK economy, enticing investors towards “smaller, high-growth opportunities such as Big Drop”.
As the dust settles in the coming weeks and months, there will be fierce pressure on Sir Keir and the new Labour government to deliver on promises and heal the country’s disillusionment with Westminster.
“The new government needs to demonstrate quickly its commitment to deliver the stability that they have promised for business,” Beale said. It is this stability, and support, that the drinks industry seems to most crave.
Now, the real work begins.
*In 1970, the UK Conservative Party led by Ted Heath won a victory against the Labour Party, despite polls predicting the opposite.
