Nearly three quarters of scotch whisky distilleries expect their energy costs to rise this year.
Distilleries slammed the Government for leaving out spirits producers from the Energy Bill Relief scheme when other alcohol categories were included.
They blasted that it “makes no sense given the high energy intensive nature of distilling” - and called on Chancellor Jeremy Hunt not to fuel industry costs by hiking excise duty in next month’s Budget.
A survey of distilleries conducted by the Scotch Whisky Association (SWA) found 27% expect energy costs to rise by over half again in 2023.
Two-thirds of distillers also expressed fears Jeremy Hunt could increase alcohol duty in the Budget, which would come into force from August.
The SWA has called on the Chancellor to freeze duty beyond August to support the industry.
It warned an increase could harm business investment and the hospitality sector especially on top of the cost-of-living crisis.
Mr Hunt confirmed in December that duty would remain frozen until summer when a new system to tax alcohol comes into force.
An increase in duty by the rate of inflation in the winter would have represented the biggest tax hike on Scotch since excise duty was introduced in 1642, despite 70 percent of the cost of a bottle already being claimed in tax, the SWA said.
Mark Kent, chief executive of the SWA, said: “The government provided much-needed certainty in December by extending the duty freeze. It was the right decision then and would be the right decision in the March Budget.
"Only a few months on from the extension of the freeze, the economic challenges our members and the businesses they rely upon face are not going away.
“Unlike other parts of the alcohol industry, distillers have been left out in the cold and unable to access the government’s business energy relief scheme, so any rise in duty would further compound the pressures they currently face in paying rising energy costs.
“Scotch whisky has consistently delivered for the UK economy when given stability and certainty through duty freezes, enabling the industry to reinvest in the economy. Our message to the Chancellor is clear - increasing duty would be the wrong decision and the wrong time.
"By freezing duty the government can support Scotch and avoid unnecessarily fuelling inflation at a time when there are already significant pressures on businesses and households, and consumers.”
A government spokesman said: “We have frozen alcohol duty for a further six months from April to reassure and provide certainty to distilleries and protect them from rising inflation. We have also cut their bills through our energy support package and a £2.4 billion fuel duty cut.
“Meanwhile our historic Alcohol Duty Review also means from August drinks will be taxed according to strength. The alcohol reforms will support pubs and help small producers to expand and thrive.”
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