Blog: Olly WehringCost plus duty? Hear, hear. Or, Yes! Yes! Yes!

Olly Wehring | 19 January 2011

The news yesterday (18 January) that the UK Government is to ban alcohol sales below the sum of cost price plus duty has split the drinks industry, prompted a sea of calls to radio stations and given TV reporters ammunition to hit the streets and ask members of the public what they think of the matter - like they need a reason

The naysayers claim this will do nothing to alcohol prices as they currently stand in the UK, with binge drinking also widely expected to carry on regardless.

Meanwhile, the majority of our industry - by which I mean drinks producers - has welcomed the move (while the on-trade will see the gap between their alcoholic drinks prices and those in the off-trade stay as wide as ever: BUT, THAT'S NOT THE POINT), with some of these fans of the news meekly suggesting that introducing pricing controls is no substitute for education in the perils of excessive drinking.

Of course, drinks producers will applaud this move; for two simple reasons. Firstly, as I've said, it will change next to nothing when it comes to prices – have you found a litre of vodka for less than GBP10.71 (US$17.11)? Secondly, this looks like at least something is being done about a problem.

Suggesting that a higher minimum price limit would have been a wiser move does not take into account that this could provoke the European courts, who would look seriously at this as a contravention of competition guidelines. Besides, as several senior members of trade organisations in the UK have told me, there's nowhere near enough solid evidence linking cheap alcohol with binge drinking.

The Government's move is a win-win for our industry. Whilst it may be a stop-gap, and a medium-term one at that, I imagine many will nod sagely, breathe a sigh of relief and wink quietly to their colleagues.


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