The FWD finds several holes in the Budget

The Federation of Wholesale Distributors responded swiftly to Wednesday’s Budget, with chief executive James Bielby listing the soft drinks levy, National Living Wage and potential new duty rates on cider as the key issues for food and drink wholesalers.

He said that, in announcing that the levy on soft drinks would be 18p per litre (on drinks with more than 5g of sugar per 100ml) and 24p per litre (8g or more of sugar per 100ml), Chancellor Philip Hammond was highlighting manufacturers’ willingness to reduce sugar content in their products, “but he has done nothing to address the potential for tax-evaded products to flood the market.

James Bielby: ‘The Budget introduces changes which will disproportionately affect our members and their 400,000 retail and foodservice customers.’

“The levy is not placed at the point of entry of high-sugar soft drinks at borders, and responsible wholesalers who pay the new tax could find themselves in competition with criminals who do not.”

Bielby added that the FWD is working closely with HMRC to reduce the risk of fraudulent sales.

“A consultation on a new duty rate for still ciders at just below 7.5% is welcomed by the FWD, as we believe price intervention is the best way to regulate an alcohol market where voluntary schemes have not prevented very low cost alcohol being widely available in most supermarkets.

“As the affected ciders represent only 0.1% of the market, we will be ensuring any change in duty rates takes into account the deep discounting of other alcohol products by national retailers.”

Bielby said that next month’s rise in the adult National Living Wage to £7.50, along with the new Apprenticeship Levy, “puts further pressure on low-margin wholesalers, who are already facing rising product and commodity prices. Wage increases which do not reflect trading conditions are likely to result in recruitment freezes, reduction in hours, or job losses.”

The Budget, he stated, made no mention of the “tumultuous changes” to food and drink distribution that will come with Brexit. “Instead, it introduces changes which will disproportionately affect our members and their 400,000 retail and foodservice customers.”

Bielby concluded: “We will work with HMRC to ensure that illicit product does not get a foothold in the UK soft drinks market and that any duty rate rise for high-strength ciders is introduced in the context of equal measures to tackle irresponsible promotions in other alcohol categories.”

Tel: FWD (01323) 724952