Government backs ban on below cost

21 January, 2011

The government has confirmed its ban on below-cost sales of alcohol will set the limit as the cost of duty plus VAT.

The measure will effectively define the minimum price for a can of 4.2% abv lager as 38p and a litre bottle of 37.5% abv vodka as £10.71.

The Home Office move dismayed alcohol charities and groups representing the medical profession, independent retailers and the on-trade, but was welcomed by multiple retailers and the Wine & Spirit Trade Association.

Asda said last July it would unilaterally commit not to sell alcohol at below the cost of duty and VAT. A spokeswoman said: “We called on the government to establish a floor price below which it would be illegal to sell alcohol. We are pleased that the government has today recognised the benefits of this approach.”?WSTA chief executive Jeremy Beadles said it was “the practical way to implement this policy”.

But Brigid Simmonds, chief executive of the British Beer & Pub Association, said the level would “stamp out the worst cases of below-cost selling” but “not have a significant impact on low-priced alcohol in supermarkets”.

James Bielby, chief executive of the Federation of Wholesale Distributors, described it as “a missed opportunity to prevent very cheap alcohol being used as a hook to bring customers into a supermarket”.

He added: “Our concern is that, with no curb on the availability of very cheap alcohol from supermarkets, smaller traders who cannot offer the same prices on legitimately sourced stock will be tempted to investigate other options, such as alcoholic drinks on which UK duty has not been paid.”?James Lowman, chief executive of the Association of Convenience Stores, said the government definition was “neither realistic nor credible” and would “satisfy no one, apart from the big supermarkets”.

Camra said the decision was a “green light for supermarkets to keep selling booze at pocket-money prices”.

The Home Office said the move was “an important first step in delivering the government’s commitment to ban the sale of alcohol below cost.” Crime prevention minister James Brokenshire said: “We are sending a clear message that the government will not stand by and let drinks be sold so cheaply that it leads to a greater risk of health harms or drunken violence.”




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