Majestic pulls wines from shelves after tax raid makes them unprofitable
Majestic has axed wines from a string of small vineyards after a shake-up of alcohol tax rates made them unprofitable.
John Colley, chief executive at the wine retailer, said the retailer had pulled a number of wines from its shelves in the wake of new rules which came into effect in February.
He said: 'Typically you would range some of these wines for consumers because they love them. But it becomes much more a commercial decision with the changes being brought in. That's the sad thing.'
Under previous rules, wines between 11.5pc and 14.5pc ABV (alcohol by volume) attracted the same tax rate.
Under the new system, the tax due on them is calculated based on their individual strength, making some wines much more expensive and creating a mountain of extra paperwork for retailers.
Mr Colley said: 'If you've got something that just doesn't make sense because the volumes are so small and the cost of administration [has risen], there's an impact. You just can't make any money from doing it.
'We've spent hundreds of hundreds of thousands of pounds on systems just to manage it, it's that complex.'
It follows warnings from Mr Colley last year year that some of shoppers' favourite wines 'could increase in price, or at worst disappear from shelves altogether' because of the changes.
The shake-up of alcohol duties was the brainchild of former prime minister Rishi Sunak, but was pushed through by the current Labour Government despite fierce lobbying from industry.
Mr Colley insisted the changes would not be noticeable to most shoppers unless they were specifically seeking out wines that had been delisted.
He said: 'We still have over 1,300 in our offering. The added advantage that we have in Majestic is we've got trained and qualified experts, so if we haven't got a specific Amarone that they were after, we have got an alternative.'
Founded in 1980, Majestic runs 213 wine stores on British high streets.
The company has been expanding its presence across the country, and last week completed a deal to buy the drinks wholesaler Enotria & Coe, which suppliers restaurants and retailers with high-end wines. This followed its acquisition of bar group Vagabond Wines last year.
Mr Colley said the company planned to keep opening retail stores, but warned the barrage of tax increases levied on businesses this month meant 'we're having to be a little bit more picky about types of shops for opening', singling out the rise in employers' National Insurance contributions.
He said: 'It's not insignificant. We've had to cut our cloth accordingly within our retail business model. The sad thing is that the changes made affect workers.'
A government spokesman said: 'The alcohol duty reforms have modernised and simplified the duty system, prioritising public health and incentivising consumption of lower strength products.
'We continue to work closely with the wine sector to drive growth, support high-quality jobs and identify opportunities to export the UK's fantastic wines across the world.'
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