Alcohol Duty
Not wanting to miss out on some substantial additional income, governments tax the sale of alcohol. In the UK it's called duty and is imposed per litre of pure spirit contained in the alcoholic drink. From the 1st August 2023 new rates apply to all alcohol products produced in, or imported into, the UK. The rates vary depending upon the type of drink and the ABV but we'll narrow our focus to only whisky here and that means duty of £31.64 per litre for drinks with an ABV of 22% or more.
As an example, taking a standard 700mℓ bottle of whisky at 40% ABV, the duty is
0.7ℓ x 40% x £31.64 = £8.85.
Now, the Government doesn't miss a trick and charges VAT, not just on the cost of the whisky but on the duty too. So even if the costs of raw materials, distillation, bottling, transport and ancillary things like marketing and profit were zero, the minimum cost of this bottle would be £10.63. So when you see a bottle of Johnnie Walker Red Label at £15.00, all manufacturing costs have to be in 83.33% of that remaining £4.37 - the other 16.67% is more VAT.