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The cost of drink

Brian Taylor | 11:31 UK time, Wednesday, 10 March 2010

Intriguing exchanges in the health committee today with the drinks industry, mostly, pressing hard against Scottish Government plans for minimum pricing for alcohol.

One exception is Tennent's Caledonian who argued that, if implemented appropriately, minimum pricing could be part of a package aimed at tackling the social problems associated with drink, especially if it was aimed at the high-strength products.

But, for the most part, the drinks industry executives giving evidence to MSPs today argued that minimum pricing was a blunt instrument which would do little to tackle perceived problems and would risk harming their business considerably in the bygoing.

Whyte and Mackay, for example, warned of damage that would be done to their production of low-cost, supermarket own-brand Scotch.

They forecast that between 200 and 300 jobs could go.

Further, the industry argued that minimum pricing was illegal under European law - and would be challenged as such, should the Scottish government proceed.

The discussion this morning ranged far and wide through labelling, health warnings and other issues - as it did later on such issues as the planned social responsibility levy.

Trading laws

It appeared from the general tone of the questioning that MSPs felt the industry could do more to address the social consequences of their products.

But perhaps the sharpest exchanges occurred between Michael Matheson MSP and Gavin Hewitt, the chief executive of the Scotch Whisky Association.

Mr Mathieson was plainly exasperated by Mr Hewitt's repeated insistence that minimum pricing would be illegal in that it interfered with international trading laws on price-setting.

Mr Hewitt asserted that, should an exception be made for Scotland, then other countries might use that precedent in order to impose punitive pricing on imported Scotch in order to protect their home markets.

He gave the example of Korea where, he said, the association had to be perpetually alert to the prospect of discriminatory pricing.

The Koreans, he said, had a health tax waiting in the wings which would affect only spirits that were more 30% alcohol by volume.

That would hit Scotch but would not affect local Korean Soju.

Scotch trade

According to Mr Hewitt, the Korean health tax was only kept at bay because it was internationally illegal to use such devices to interfere with price mechanisms.

Scotland might, inadvertently, create a precedent, potentially affecting £600m in trade for Scotch.

Mr Mathieson disputed that. He said that, if the European Union ruled minimum pricing in Scotland was legal, then such an initiative could not be used as a global precdent.

Mr Hewitt, in turn, disputed that.

UPDATE AT 1440: Clarification re the jobs point which emerged after the committee hearing.

It now appears the assertion by Whyte and Mackay re job losses is based upon an assessment of what might happen if minimum pricing were to be introduced across the UK.

But, of course, the proposal is presently being advanced by the Scottish government. For Scotland only.


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