Why the tax increase on alcohol also has consequences for non-alcoholic sparkling wine

The Federal Association of Wine, Sparkling Wine and Spirits (BWS) is sounding the alarm. The planned tax increase on sparkling wine could slow down investments in the growing segment of non-alcoholic sparkling wine.

The situation with sparkling wine is “more dramatic” than the situation with spirits, said association head Alexander Tacer in the pro-newsletter “Health” of the news magazine “Politico”.

The federal government wants to increase the alcohol and sparkling wine taxes by 20 percent each at the turn of the year. Finance Minister Lars Klingbeil (SPD) is hoping for 455 million euros more for the budget every year - an additional 65 million euros should flow from the sparkling wine tax. The Union has already spoken out against an increase.

Tacer called the tax increase on liquor a “painful compromise.” When it comes to sparkling wine, it hits the industry at a bad time. Rising taxes could reduce sales and force winemakers to save money. The alcohol-free sector in particular, in which, according to Tacer, Germany currently plays a “pioneering role”, could suffer as a result.

The figures that the association calculates are clear: for 2027 it expects twelve percent less sparkling wine sales. Seven percentage points of this were due to the consequences of the tax, five to the already expected decline in sales. For consumers, this means a total of around five percent higher prices. According to the association, the German sparkling wine market has a volume of around 800 million euros. The tax increase could reduce sales by around 93 million euros, and small businesses in particular would suffer.

From a health science perspective, the picture is different, although not a flattering one. Jakob Manthey, addiction researcher at the University of Hamburg, welcomed the plans in principle. “This is the first increase in 30 years,” he told Politico. Nevertheless, it will “not be a big hit for your health”.

The planned increase only affects around 30 percent of the overall market. “The new taxes mean maybe a few cents increase in prices,” Manthey said. This allows the price to rise to a more normal level, but has hardly any steering effect. That’s “a shame,” but at least it’s “a compromise.”

There is also an alternative effect: According to Manthey, people who buy alcohol a lot and often will probably switch to beer and wine, which are not covered by the increase. Those who have previously bought little and irregular alcohol are unlikely to change their behavior given the small price changes.