UK: Drinks sector split on below-cost sales ban
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.
With the end of the year looming, just-drinks is running a series of 'Top Tens of the Year' in the run-up to Christmas. Here are the ten most read interviews on just-drinks in 2010....
As the old year decomposes slowly in its flat, forgotten by family and neighbours alike, and the newly-born one has its buttocks metaphorically slapped by the midwife of hope, Chris Losh takes his ann...
Welcome back from what felt like a long Christmas and New Year break. As always at this time of year, the media is awash with predictions about the 12 months ahead. Who are we, then, to buck this time...
With the end of the year looming, just-drinks is running a series of 'Top Tens of the Year' in the run-up to Christmas. Here are the ten most read comment pieces on just-drinks in 2010....
Speculation has started circulating this week that Diageo may be looking to snap up Turkish spirits company Mey Içki from private equity firm TPG Capital. While Diageo won't be drawn on the rumours, a...
- Interview - Bacardi global marketing boss, whisky
- Has Coca-Cola Jumped From Frying Pan to Fire?
- Constellation grapples with glass as reality bites
- just The Preview - Carlsberg's Q2 & H1
- just The Preview - Heineken's H1 & Q2
- Diageo doubles intake for spirits start-ups scheme
- Second senior exec to depart Bacardi
- Diageo appoints head for Asia marketing unit
- Bacardi sees North America president step down
- Constellation recalls Corona over glass threat