Home Office proposals to introduce a 45p minimum unit price for alcohol should give the independent off-trade a fighting chance and prevent the supermarkets’ aggressive drinks discounting – but the same measures could also fuel the growing illegal trade in duty-avoided beers and wines and pile further pressure on the pub trade.
The proposals – which are similar to measures already proposed in Scotland – are currently in a consultation, the results of which should be announced in February. Although primarily aimed at tackling alcohol misuse and binge drinking, they were broadly welcomed by the Federation of Wholesale Distributors (FWD). Campaigners, including Alcohol Concern and the Alcohol Health Alliance, as well as police forces and health authorities, have also given the proposals the thumbs up. Although most licensees seem to be are against minimum unit pricing, many – including those in the North East, where supermarket pricing is seen as being particularly competitive – are in favour.
The drinks industry is generally against minimum unit pricing. Accolade Wines, the UK’s biggest wine distributor and owner of the Hardy’s and Echo Falls brands, said any such move would damage the wine industry and “cripple” the on-trade.
Paul Schaafsma, Accolade UK general manager said the proposals would add at least £1 to the price of a £3.50 bottle of wine and would effectively be “a tax on the poor”
“Relentless tax increases are crippling an industry that provides thousands of jobs and contributes significantly to the national economy and local communities,” he told Wholesale News. “In recent months we have seen the demise of major drinks companies including Waverley TBS, D amp;D Wines and Stratford’s, due to the difficult trading environment and crushing tax regime. The government must re-think this policy if it is serious about backing UK businesses, creating jobs and driving growth – not decline.”
Miles Beale, chief executive of the Wine and Spirit Trade Association, said that alcohol misuse was a matter of education and personal responsibility, adding there was “no evidence” minimum alcohol pricing would be effective.
However, while it welcomed measures to stop “irresponsible” promotions, the FWD also warned that the proposals would make the market more profitable to fraudsters and add to the £1.2bn lost each year to criminals who trade non-duty-paid alcoholic products.
It also said that unless England adopts the same unit price as Scotland – expected to be 50p – wholesalers near the border would be massively disadvantaged.
“A minimum unit price for alcohol would create a fair playing field for smaller retailers, but it would also be an incentive for smugglers and diversion fraudsters,” said FWD chief executive James Bielby. “Mainstream beers and wine brands are already widely available on the illicit, duty-avoiding market at prices that cannot be legitimately achieved. Increasing the differential between the legitimate and fraudulent markets harms law-abiding businesses and results in less revenue to the Treasury.”
“Stamping out fraud will disrupt the supply of cheap alcohol and ensure that the distribution of beer and wine remains with responsible, duty-collecting wholesalers and retailers.”
FWD members have this year reported that sales of popular beer lines have fallen sharply as some retailers turn to illicit suppliers in order to compete with supermarkets’ loss-leading promotions. They call for fiscal marks to be added to UK duty-paid beer products and for a registration scheme for wholesalers.
Government figures state that alcohol fraud costs the taxpayer £1.2bn a year – more than the £1bn estimated cost of binge drinking to accident and emergency services and a significant proportion of the £2.7bn cost of alcohol abuse to the NHS.
- As we went to press, an online poll on the Wholesale News website revealed that wholesalers were split 60-40 over the issue. Nearly two thirds (60%) of voters thought that minimum unit pricing would not affect their alcohol sales, while the other 40% thought there would be a negative effect.
What minimum unit pricing means
Should a 45p minimum unit price come into effect, this is roughly what these common SKUs would cost:-
- 440ml 7.9% lager – £1.56
- 440ml 8.4% cider – £1.66
- 750ml 12.5% wine – £4.22
- 700ml 40% whisky – £12.60
- 1ltr 37.5% vodka – £16.88