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Drinks industry shows mixed reactions to government claims

08-Jul-2004

Two suggestions by the British government this week have prompted a mixed reaction from the drinks industry there. Moves to relieve the financial burden associated with the proposed introduction of tax stamps were broadly welcomed, but the suggestion that keeping alcohol prices artificially high could curb alcoholism was rejected.

The government's decision to introduce tax strips or stamps on spirits in a bid to stop counterfeiting has not been welcomed by the spirits industry, led by Scotch whisky makers, mainly on the grounds that it will prove to be too unwieldy and expensive, with additional labelling machinery needed to meet the requirement.

Moreover, the government's claims about the size of the problem - which it puts at £600 million, citing Customs data - have been branded unreliable, with the National Audit Office suggesting that the figure could in fact be anywhere between £330 million and £1,080 million.

 

But regardless of the actual size of the problem, the government is likely to press ahead with plans for the strip stamps, though it has conceded that these may not need to be an additional label added to each bottle. Economic Secretary John Healey announced this week that whisky makers may be permitted to put stamps on the existing labels rather than over the tops of bottles, a move which would be "far less disruptive".

 

This so-called 'back label' system, proposed by the drinks industry itself, is likely to have a far smaller economic impact, as new machinery costs will be substantially reduced, but Healy stressed that a definitive decision on whether to allow this system had yet to be made, and whisky makers could still find themselves with additional labelling requirements when the tax stamps are introduced in April 2006.

 

While this was relatively encouraging news for the drinks industry, another suggestion made this week was less-than-welcome for the industry. Claims by the Home Office and the police that drinks retailers are partly responsible for excessive drinking were roundly rejected by the industry, which also bridled at the suggestion that prices for beers, wines and spirits should be fixed at artificially high levels.

 

Comments during the launch of a new initiative by the government designed to combat alcohol abuse, excessive drinking and other alcohol-related problems and suggesting that price promotions were related to binge drinking made were fiercely criticised by the British Retail Consortium, which represents the country's drinks retailers.

 

"There is no evidence to relate excess drinking to store sales," said Kevin Hawkins, BRC director general. "The argument that off-licence promotions are responsible is often put forward by those afraid of competition. Price promotions are a legitimate way to both meet consumer demand and keep up in a competitive industry - in the same way as pubs and clubs have happy hours.

 

"Whenever fixed pricing is suggested as a solution you can be sure that consumers will be the ones that lose out. The idea that introducing a fixed price on alcohol will discourage the small minority who drink in excess is misguided - price can neither resolve or be linked to such a serious social problem," he added.

 

Hawkins also added that it was unlikely that the Office of Fair Trading or the European Commission would look kindly on minimum/fixed prices, whether imposed centrally or locally.

 

He also praised the Alcohol Misuse Enforcement Campaign run by the Home Office and the Association of Chief Police Officers - at the launch of which the price fixing comments were made - as being a far more effective way of "stamping out binge drinking and its anti-social side effects".

 

The new campaign will see police in 77 areas across England and Wales focusing on "those who sell alcohol to under 18's, bars and clubs who promote irresponsible and rowdy behaviour, and drunken yobs who cause violence on Thursday, Friday and Saturday nights," according to Home Office Minister, and sponsor minister of the Government's Alcohol Harm Reduction strategy, Hazel Blears.

 

"Most of the alcohol industry act responsibly, but with this campaign we are putting across a clear message - if you sell to underage drinkers, if you promote violent and anti-social behaviour, you're not going to get away with it and we will use a raft of powers shut down your premises.

 

"We're also aiming to kick start a culture change where it will be less accepted by society for young men and women to go out and drink until they can't remember who they are, to start fights in taxi queues, and cause violent, drink-fuelled scenes. We are working closely with the police, drinks industry and local councils to reclaim our town and city centres for decent, law abiding citizens."