The prospect of Minimum Unit Pricing for alcohol in Scotland raises a number of questions for the trade in the UK. 73 questions, in fact. That is the number of individual questions we have received at the Wine and Spirit Trade Association so far from our member companies concerned as to how the new regulations will affect them.
Some are fairly straight forward to answer. Who is effected? How do you calculate MUP? When will it be implemented? and so on. Others are more complicated - what if you fulfil an order from outside of Scotland to a Scottish consumer? For many questions, there is no answer as yet as the policy is still being developed – for example how would it work with a proposed Deposit Return Scheme if that was implemented?
Given the response to these questions runs over 14 pages and references about five different Acts of the UK and Scottish Parliaments, I won’t attempt to answer them all here. But it is useful to highlight a few key points and a few milestones in the next few weeks of which the trade need to be aware.
Firstly, some key dates to look out for. There is a consultation over whether a 50p Minimum Unit Price is the right level, which closes on the 26th January. The Scottish Government have pledged to respond to this by the 23rd of February and this will be the date we find out the exact price. Although this could theoretically change, it is anticipated they will stick with their preferred level of 50p. The Minimum Unit Pricing Order is then due to be published and debated in the Scottish Parliament on the 1st March, around which time we are likely to see the Guidance to support its implementation published as well.
But May 1st 2018 is the most crucial date, as this is when the Minimum Unit Pricing Order will come into effect and no alcohol retailer in Scotland will be able to sell alcohol below the Minimum Unit Price. So, it is a tight timeframe for the industry to get prepared, particularly for retailers. The regulation is a licensing condition and therefore compliance (and penalties) falls squarely with the licensee.
The Scottish Government, for its part, has been very constructive in engaging with industry to ensure it can be implemented as efficiently as possible. As part of the public consultation they are reviewing the Business and Regulatory Impact Assessment, they are holding numerous consultation events, to which the WSTA has been involved, and have promised to publish guidance which takes into account the regulations that exist in England and Wales for the ban on below cost sales. Officials were also kind enough to look over the answers to all 73 questions our members raised, so that they have the most accurate and up to date information.
However, the exact impact will only be known when the policy is implemented. This hasn’t been implemented anywhere else in this way. So, while it is positive that the Scottish Government have also established an Evaluation Advisory Group, to commission research into its impact, there are still areas of concern that remain. For example, some value products could disappear from the Scottish market, restricting consumer choice and impacting on jobs. What will the impact be on Scottish consumers in terms of higher prices? There is concern that the policy will incentivise black market trade and cross border trading making it harder to track consumption and take consumers away from responsible retailers. Then there is the biggest question as to whether it will actually have the impact the Scottish Government hopes it will.
For these question there is no answer yet. Retailers and producers will know anecdotally what is happening to the market almost immediately, some can already guess from their own modelling, but we will only begin to see a full picture of its impact emerge in late 2018 as key consumption and sales data begins to be published. That’s why the WSTA focus is a twin track of implementation now and impact after the 1st May.
As with any change in licensing policy, implementation is complex and can be costly for the trade, even when it seems simplistic in nature like Minimum Unit Pricing and its impact can have unintended consequences. At the WSTA it is our job to provide as much clarity and support to our members as we can, whether it’s in answering one question or 73.
Carlo Gibbs is Director of UK Policy and Social Responsibility at the Wine and Spirit Trade Association.