BBPA wants tougher action on retailers

BBPA wants tougher action on retailers

Drinks industry leaders in the UK believe that the Government has underestimated the complexity of a ban on below-cost alcohol sales, amid growing division within the sector on how the policy should work.

The Coalition Government has put forward a range of options for a definition of below-cost selling, from a simple base point of duty tax plus value added tax to the inclusion of production, supply and other costs.

Ministers plan to publish a review of pricing and taxation on alcohol this autumn, with a view to legislating as part of plans to reduce the burden of excess drinking on the UK's health service.

"There's no time at all to discuss these issues," said Seymour Fortescue, chairman of the Portman Group, the industry's self-regulatory body, at a conference on alcohol and public health in London yesterday (8 July).

Other drinks sector representatives suggested privately that the Government has been naive in its timetable for a ban on below-cost selling.

Their comments come amid growing signs of division within the trade.
Mark Baird, head of corporate social responsibility at Diageo, said that the firm believes the policy is "worthy of further exploration". He said the Smirnoff and Guinness producer believes "duty tax plus VAT would be a good starting point" for a ban on below-cost sales.

Diageo remains sceptical of the link between pricing and alcohol-related harm, however. 

The Wine & Spirit Trade Association, which represents many retailers, merchants and producers, including Diageo, is also backing a basic definition of below-cost as duty tax plus VAT.

However, others in the sector want the Government to go further. Portman's Fortescue said that a below-cost ban is "probably the right way to go", but that it "needs to be more than duty and VAT". He said such a narrow definition "will not stop loss-leading by supermarkets".

Those seeking a broader definition of below-cost are mainly in the country's on-trade, which has been hit hard in the recession by retailers' cheap drinks offers and is struggling with a long-term consumer shift away from drinking in pubs and bars.
Retailers account for more than two thirds of alcohol sold in the UK, according to the British Beer & Pub Association.

The trade body wants a below-cost ban to "reflect the real cost to the retailer". It is also seeking preferential VAT rates for pubs and a lower duty tax rate on beer, because of its lower alcoholic strength.

There has been no mention from the Government of plans for a set minimum price on alcohol, although senior health officials continue to lobby for this.

For more on yesterday's conference, organised by the Westminster Food & Nutrition Forum, click here.