From 1 February 2026, the UK government will increase alcohol duty in line with inflation, building on the duty reforms introduced in August 2023. While the structure of the system remains unchanged, the rise will increase costs across beer, spirits, wine and cider.

This article outlines what is changing, the impact on businesses and the steps operators can take to protect their margins.

What’s changing?

In November 2025, the UK government confirmed that alcohol duty will now rise each year in line with RPI (Retail Price Index) inflation. From February 2026, this means a 3.66% increase across all duty rates.

The increase follows the existing reformed duty system, where tax is calculated based on:

• Alcohol by volume (ABV)
• Product format (draught vs packaged)
• Beverage category.

Unlike previous changes, this increase is not linked to small ABV band movements. Instead, a flat 3.66% rise is applied to current duty rates across all categories.

Duty impact by drinks category:

Beer

• Beer will see an increase of approximately 1–2p per pint
• Lower-strength beers below 3.5% ABV will increase by just over half a penny per pint
• Draught beer retains a very marginal advantage over packaged formats, but only when comparing full pints (568ml)
  • The advantage diminishes when comparing smaller serves (e.g. 330ml bottles vs pints).

What this means: The duty increase is modest, but margin pressure remains, especially where pricing flexibility is limited.

Spirits

• Core spirits categories remain constrained by minimum ABV requirements (typically 37.5% ABV)
• This limits opportunities for duty mitigation within traditional spirits.

However, there is significant opportunity through draught RTD (Ready-to-Drink) and RTS (Ready-to-Serve) products as these can deliver up to a 25% reduction in duty per serve. Draught products below 8.5% ABV offer the strongest duty efficiency.

What this means: For spirits-led venues, the greatest opportunity comes from adopting new formats rather than new spirit categories.

Cider

• Cider duty remains approximately 40% of equivalent-strength beer
• Cost impact is less than 1p per pint
• Draught cider offers only a negligible duty advantage over packaged (fractions of a penny)

Important consideration: While duty remains favourable, cider often carries higher cost of goods sold (COGS), which should be factored into range decisions.

Wine

Wine sees one of the more complex outcomes from the February 2026 changes.

What’s different this year?

• Unlike the February 2025 increase, duty is not changing in 0.5% ABV steps
• All existing wine duty rates will increase by a flat 3.66%
• The percentage increase is applied to the existing duty base, meaning:
  • Higher ABV wines will see a larger cash increase.

Market impact:

• Winemakers have only recently confirmed final ABVs from the 2025 harvest
• This has delayed price communications and created uncertainty
• Many suppliers are now passing through increases as ABV data becomes available.

How our team can support you through these changes…

The February 2026 duty increase is modest rather than disruptive, but it confirms a clear trend – alcohol duty will continue to rise each year in line with inflation.

The Regency team can support your business and mitigate some of the cost increases by sharing their advice and expertise on:

• Smarter ranging across an extensive supplier and brand owner network
• Exploring new drinks formats and product innovation
• Active management of pricing and profit margin protection.

If you’d like support in reviewing your drinks menus, activating leveraging tools and exploring alternative drinks formats, please get in touch with your dedicated Procurement Manager.