Minimum pricing raises risk of fraud

Proposals to introduce a minimum unit price for alcohol will prevent supermarkets’ deep discounting but could also fuel the growing illegal trade in duty-avoided beers and wines, says the Federation of Wholesale Distributors (FWD).

While price controls would stop irresponsible promotions, FWD warns that the move 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 – its member companies 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 member companies, which include direct distributors and cash and carry operators, report that sales of popular beer lines have fallen sharply as 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.

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