The voice of the wine and spirit industry

Pricing

Much of the public policy debate around tackling harmful drinking has become centred on the price of alcohol. The polarisation of the debate in this way is not helpful, as it risks sidelining effective measures we could put in place, focussed on helping people make informed decisions about drinking more healthily. Policy should be evidence-based and we do not believe there is a convincing case that higher prices will reduce alcohol harm.

Below cost sales
The Coalition Government made clear in its Programme for Government its intention to introduce a ban on the sale of alcohol below cost price.  Given this commitment,  the WSTA called for a ban on sales below ‘duty plus VAT’ as the best way to implement the policy, on the basis that these are both consumer taxes and therefore the cost should be passed on to the consumer. Unlike other potential models, this definition is transparent and does not adversely affect any particular business model.

We therefore welcomed the announcement by the Home Office in January 2011 to deliver on its commitment using the definition of duty plus VAT. This will prevent retailers selling a 1 litre bottle of vodka (37.5 per cent abv) for less than £10.71, a bottle of wine for less than £2.03 and a 440ml can of lager (4.2 per cent abv) for less than 38p. We will continue to work with Government as necessary on the implementation  of this policy. 

Minimum unit pricing
A minimum pricing policy, whether applied nationally or at a local level, would be wrong both in principle and in practice.  There is no real world evidence that minimum unit pricing would be effective in addressing alcohol misuse, as it has never been tried on a national basis anywhere in the world. It would penalise all consumers, especially families on low incomes and pensioners, rather than targeting problem drinkers. It would however harm businesses, distort trade and is likely to be illegal under UK and EU law.

The WSTA is concerned about proposals by the Devolved Administrations and a number of local councils in England to introduce minimum pricing. Although plans to introduce minimum unit pricing in Scotland through the Alcohol (Scotland) Act were defeated, the SNP Government in Scotland has reaffirmed its commitment to the policy. A consultation on the introduction of minimum unit pricing in Northern Ireland is underway and the current Welsh Assembly Government has also stated its support for a minimum pricing policy. In England, the Association of Greater Manchester Authorities, which has proposed the policy for its ten member councils, is among the areas considering minimum pricing.

Imposing a pricing policy in one area that is inconsistent with the rest of the UK would impose significant additional operating costs to the detriment of businesses and local economies. We will continue to oppose minimum pricing and make the case that alternative approaches will be more effective at reducing alcohol misuse.