Comment - UK PM's Moral Move on Pricing a Change of Heart
The UK's Prime Minister David Cameron has stepped in to tackle the UK's social concerns around alcohol
A policy that is probably illegal, will make UK supermarkets richer and disgruntle voters. Now that’s what I call a bold move.
Prime Minister David Cameron has today flummoxed a sizeable proportion of his ministers - particularly Health Secretary Andrew Lansley - and the drinks industry, by proposing to tackle the UK’s “binge-drinking” culture with minimum pricing, as part of a wider alcohol strategy.
From my understanding, this came about through a relatively last-minute intervention by 10 Downing Street, who are desperate to be seen to be getting tough on alcohol (and escape the negative post-Budget “granny tax” headlines).
Lurid tabloid newspaper coverage of drunkeness in Britain, and general angst around the issue, have finally persuaded Cameron to go for the “nuclear option”. This, despite levels of UK alcohol consumption actually falling since 2002.
It’s also indicative of what being in government has done to Cameron’s thinking.
During a one-on-one interview with him four years ago, he told me two things that fly in the face of today’s announcement. One was, he didn’t believe there was a “silver bullet” to tackle binge-drinking. Another was, he was against banning things, being a free-market Tory.
But now it appears he is on a moral crusade, being quoted today as saying: “I know this won’t be universally popular. But the responsibility of being in government isn’t always about doing the popular thing. It's about doing the right thing.”
What’s surprising is how much Cameron has put himself on the line.
The Scottish government is already ahead on this issue and determined to become the first country in the world nationwide (aside from Canada where a floor-price system operates in some provinces) to introduce a minimum price.
But, this is by no means a certainty, bearing in mind the SNP is certain to face a legal challenge from the Scotch Whisky Association.
What happens if it doesn’t happen in Scotland, if the European Union rules it as being illegal? Will the Coalition still press ahead?
Predictably, producers, such as Diageo and Heineken, have come out with strong statements opposing today’s plans. As well they might. If - and it’s a big if - minimum pricing is forced through, it could pave the way for other nations to follow the UK’s lead and set a floor price.
Ultimately, the argument from the UK off-trade is a minimum price will do little to tackle the problem of binge-drinking - and educating consumers about alcohol is a better way to go. In a nutshell, the thought of a government intervening on the price of alcohol in a free society is a scary one.
The unspoken feeling here, too, is that, once a government convinces itself that controlling price can influence overall consumption, the stable door will be blown open, never to be closed again. This could also lead to the UK Treasury eyeing up more duty increases.
The on-trade stands to benefit from minimum pricing in the short-term, but more duty rises would, of course, further hit this side of the trade.
Meanwhile, with prices rising, the supermarkets will increase their revenues. The government, however says it “expects” stores to “put any extra profits they make towards lowering the price of other goods”. And, how do you measure that exactly?
The UK may be the drunk man of Europe. But, ironically, in trying to rectify the problem, our Prime Minister could have inadvertently put himself on the course to political oblivion.
Many brands in the drinks industry rely on strong connections with their country of origin. James Boulton, creative and managing director of branding specialist Claessens International, discusses how ...
You'll have seen, I'm sure, the wave upon wave of Diageo-related speculation in recent months regarding the company's relationships with both the owners of Jose Cuervo Tequila and India's United Spiri...
The future remains bright for the energy drinks category, according to Richard Haffner....
Carlsberg was keen to put on a show in Russia last week. The Danish company had invited the analyst community to its main Baltika brewery in St Petersburg and wanted to reassure folk that, despite rec...
- A-B InBev's Move on Tennent's Super Makes Sense
- Analysis - Stock Spirits: Poland's number one
- What's on the M&A cards for San Miguel Brewery?
- Brand Diversification Driving Craft Brewery Growth
- Comment - Wine - Not on the List
- Pernod Ricard's Café de Paris Pear, Pomegranate
- PepsiCo CEO sees "profound" change in US consumers
- William Grant & Sons boosts Travel Retail team
- First Drinks becomes William Grant UK
- William Grant sinks GBP185,000 into "No" camp