How can distillers improve efficiency amid rising costs?

The August 2023 alcohol duty hike of over 10% continues to impact distilled spirits manufacturers. As the largest such increase in 50 years, this increase has reverberated through all parts of the supply chain, greatly affecting the profit margins of distillers. Further pressure was added in February 2025, when the duty rate rose by another 3.65% in line with Retail Price Inflation.¹  Understandably, this exacerbated an already challenging financial situation for industry stakeholders.

Combined with increases in raw materials and energy costs, the need to find cost savings is a growing priority across the sector. Though these raw material prices are subject to less controllable macroeconomic global trends, the same does not apply to energy pricing. 

Properly specified, decentralised industrial generators and energy-efficient manufacturing HVAC equipment could help distillery stakeholders improve operational costs and efficiency. The scope for improvement is vast, especially in a manufacturing process where precise power and temperature control is essential to ensuring product quality. 

Similarly, given the energy-intensive nature of machinery used in fermentation – including pumps, mixers, industrial chillers, heaters and control systems – any efficiency gains could be further amplified across an entire site. However, the duty hike has also had an impact here.

According to the Survation UK Distillery Industry Report 2023, 71% of distillers said they are less able to invest in business improvements such as increasing production capacity or adopting more innovative technologies following the duty change.²  Consequently, distillers are in a difficult position. Upgrading to high-quality, high-efficiency equipment is essential for making energy savings and reducing operation costs, but the duty rise has limited capital spending budgets used to purchase this equipment.