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Boozy battle as drinkers hit the price floor

Douglas Fraser | 07:23 UK time, Thursday, 26 November 2009

Best to get the ultra-cheap cider in soon - if that's your preference - before the Scottish Government pushes its price northwards.

Publication of its minimum pricing draft legislation is imminent, and a long consultation has done nothing to placate the drinks industry.

There's a big political battle to come on this one.

The Scottish Government's case for putting a floor on alcohol is that it responds to the requirements of improved health, long-term NHS costs, and the price in crime and disorder of too many people drinking too much too fast.

It seems there's more being added. A ban on advertising, at least in print, and sponsorship - from football and rugby shirts and across much of Scottish culture - could be a power taken under the Scottish government's wing, if it can stitch together a Holyrood majority.

The stakes are high. Alcohol is reckoned to cost the health service £3 billion for illness and injury. Only smoking and high blood pressure do more damage. Add to that £7 billion or so of loss to the economy from lowered productivity.

It's a policy which recently had a bit of evidence attached to it, courtesy of Sheffield University, supporting a minimum price of around 40 pence per unit.

But that's contested, and without convincing evidence on either side, there are plenty assertions coming from the industry that minimum pricing will hurt, and it will hurt Scotch whisky in particular.

That has the ring of a vested interest at work. And a formidably well-focussed lobby it is, fronting the campaign for the industry more widely, as it has huge clout in exports and as an icon of Scotland.

But then, being a powerful vested interest could be the reason ministers are ignoring loud protests from the big distillers.

It's pointed out that few whiskies would be affected by a floor on cheap drink: whisky specialises in premium priced products.

It's also pointed out that those raising prices to a minimum level will enjoy windfall profits, so business ought to welcome this opportunity.

But it's countered from drink producers that they don't expect to see any such windfall - that is much more likely to go to retailers. And the different interests between producers and retailers (notably the big supermarkets) have created confusion around the attempt by business to show it is taking the responsible drinking message seriously.

Drink manufacturers and the on-trade are clearly frustrated that retail is not, as they see it, pulling its weight in this campaign.

Indeed, drink producers are willing to see alcohol prices rise, but they would prefer a requirement that no retailer could price either below invoice cost or below tax - that is, a ban on the attraction of customers by loss leading.

They profoundly disagree with minimum pricing. Why? There's the domestic arguments, such as cross-border leakage, of cheap booze trucked north of the Cheviots. A floor on pricing won't do anything to tackle the rapid growth in risky levels of drinking by more prosperous people: not even the notorious Buckfast caffeine-loaded tonic wine will be affected.

And some producers are concerned that raising the price of cheap drinks towards the level of premium-priced alcohol distorts the market unfairly, stacking it against the more responsible premium marketing strategy.

Then there's the export argument, which is the one that really matters to Scotch whisky. It exports around 90% of its output, and fights a constant battle to break down trade barriers.

The rewards of having done so are considerable, and the rewards of continuing to do so - in India, for instance - could be awesome.

To impose a floor on minimum pricing, the Scottish government would have to use a public health exemption from international trade agreements.

That's possible, but not easy to use, and it's open to legal challenge. If successful, the whisky industry's argument is that foreign governments, under pressure from their domestic drinks industries, will use that as an excuse to put up their own tax barriers.

And in countries such as South Korea, they could use the health argument to differentiate between higher tax on high alcohol content (Scotch whisky) and lower tax on less unhealthy, lower alcohol content (the local distillation).

There doesn't seem much room for manoeuvre from the Scottish government. It could be proposing the advertising and sponsorship ban as a bargaining chip, giving it something it can later negotiate away.

But the minimum price proposal looks increasingly like a policy on which it is digging in its heels - designed to show it is serious about public health and street disorder, no matter how much it alienates the alcohol business.

If a smoking ban was a risky policy that became a badge of pride for Jack McConnell's administration, so too, the SNP could cite this achievement in reclaiming the streets.

Note also that after the battle with Diageo over the bottling plant closure in Kilmarnock, there's bad feeling between these two sides. A suggestion that the government could bury its differences over Kilmarnock in exchange for some help over minimum pricing did not get far.

The impasse between ministers and industry could be resolved by parliamentary arithmetic, in that ministers don't command a majority.

Don't be surprised if an opposition amendment seeks to replace minimum pricing with the proposal to limit prices to no less than invoice cost.

Could that swing this debate? Not if the Licensing Act, as recently introduced, is any guide.

In preparation, it was subject to extensive consultation and gathering of evidence. Passed in 2005, it showed how MSPs can consider the evidence and listen to voices, and then throw all that overboard when it comes to a race, at the final stage of legislation, to see which party can be toughest on aggressive binge drinking.

Comments

  • Comment number 1.

    A possible ten billion saving in health and productivity, less domestic violence, less crime on the streets. It's a no brainer !

    The Labour argument on this isssue is very weak. May I suggest that this issue is being contested for election purposes and nothing more.


    Wansanshoo.
    Nationalist & Anti Theist.

  • Comment number 2.

    "There's the domestic arguments, such as cross-border leakage, of cheap booze trucked north of the Cheviots."

    The proposed increases aren't that high! You would have to ship huge amounts to make any kind of profit. For your own uses - is it really worthwhile going that extra distance to save yourself such a small amount.

    Also, why can't scotch whiskey be excluded? It seems to me that it isn't the drink causing most problems, not being the tipple of choice for the under 30s.

    That solved, onto football and Rangers woes...what we need to do is merge Rangers and Celtic (forthwith called Rantic).....

  • Comment number 3.

    Lets face it, this minimum price won't affect Buckfast, it wont affect alcopops, all it will hit are the cheap drinks that ordinary folk on low and moderate incomes enjoy sensibly. We'll still have drunken teenagers, because they don't buy Tesco value Bitter or larger!

  • Comment number 4.

    Can't see the problem for the whisky industry, if they are as good at exporting as they claim, the home sales shouldn't affect them all that much. Most of the profit from whisky disappears out of Scotland anyway nowa days. It's doubtful if putting the price up will affect the drunken sods that cause all the problems anyway, as an old aquaintance used to say, they would drink it through a ------ cloot, whatever it cost.

  • Comment number 5.

    nanny state again

  • Comment number 6.

    This alcohol problem is not exclusively Scottish; England and Wales are equally troubled as well.

    The only problem is that the current Scottish Government has the social costs at hand whilst the English are dragging their collective feet so far, the Welsh on the other-hand are trying to gain the powers from Westminster in order to sort it out there.

    With the BMA, the Social work departments and the Police backing this move, why oh why is it the Politicians’ that are dragging their feet?

    Could it be that with a General Election looming, they are looking to their future employment on particular boards, or the provision of augmentations, tax free, to their pension funds?

  • Comment number 7.

    To 'Scottish' Labour: SHAME SHAME SHAME

    And the same goes for the Labour biased Scottish Media - spineless.

    Both are in the pockets of the drinks cabal which runs Scotland.
    Almost all health professionals & the police support minimum pricing.

    All those who have a vested interest in the drinks industry, including 'Scottish' Labour's own shadow health minister who has connections with the Whisky industry, are against it.

    Which one of these groups actually cares about our health and the state of our town centers on a saturday night, and which is more concened about making a quick profit at the expense of Scottish lives?

  • Comment number 8.

    John Ruddy
    I don't believe that "ordinary folk on low and moderate incomes" sensibly enjoy 10% ABV superstrong cider and its ilk. Those products, the chief targets of a 40p per unit minumum, are only consumed by people who intend to get as drunk as possible for as little as possible.

    It is also the case that many (or even most) young people who are out their faces in town on a Saturday night start off drinking cheap drink in the house to get 'tanked up' before they go out.

    Of course, there should ideally be an increase in tax rather than a minumum price, so that the money raised can be spent on enforcement of the law and in education measures. That requires Scotland to have control of its own excise duty.



  • Comment number 9.

    And how much will the price change on these superstrong ciders? Very very little. We have SNP MSP's naming and shaming the products which they obviously believe is the cause of the problem, and many fo them won't change at all in price at 40p a unit, or even 60p a unit. The cheap drink young people drink might be something such as a bottle of supermarket own branhd vodka. Its price will go up from £9 a bottle to £10 a bottle. Big deal. One whole extra pound for a whole bottle. My point is that the kids who want to get tanked up arn't affected by small changes in price. They're addicted by that point. Double the price and you might have an effect. Of course, this could help the scotch whisky association as if a cheap bottle of vodka costs the same a single malt, then their sales might go up!

    The existing licensing laws have sufficient power to cure some of these excesses. You can raise the age at which it is permissible to buy alcohol, you can limit the amount of alcohol bought in a single transaction, and you can withdraw licences from retailers who promote offers at less than cost etc.

  • Comment number 10.

    John Ruddy

    I entirely agree with your last paragraph. All those actions should be taken, and more, to clamp down on underage and excessive boozing.

    But there is no doubt that price is also a factor in the equation. Alcohol is generally a discretionary purchase and is price sensitive. (If it wasn't, would the supermarkets offer cut price deals on it?)

    Scotland would be better off without £9 bottles of vodka and the like. The BMA and the police agree on that, and so do I.

    If the proposed level looks inadequate to you, ould you advocate a higher minumum price than 40p a unit, or maybe a higher level of excise duty?

  • Comment number 11.

    It has to be said that the SNP are coming out of this with more credit and integrity than the other parties put together. Didn't have much time for Nicola Sturgeon before but on this issue she is showing real leadership.

 

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