Multiples windfall with unit price

01 October, 2010

Retailers and suppliers would stand to make £700 million in extra revenue if minimum alcohol pricing was introduced across the UK, a report from the Institute for Fiscal Studies says.

The study found spending on alcohol in Tesco would increase by 9% with a 45p-per-unit minimum price – the level proposed by the SNP in Scotland.

Asda alcohol turnover would rise by 11%, Morrisons by 8% and Sainsbury’s by 7%. But those with most to gain are the discounters, with Lidl’s BWS turnover likely to rise by a fifth, Aldi’s by 16% and Netto by 12%, according to the study.

Upmarket stores would gain least, with Waitrose adding just 2% to its alcohol revenue, and M&S seeing no change at all.

Andrew Leicester, senior research economist at the IFS and one of the authors of the research, said: “Minimum alcohol prices would transfer large sums from consumers to those firms that retail and produce alcohol, but may target households that consume the most alcohol more directly than increases in alcohol taxes.

“The government should seek to change European regulations on how alcohol taxes can be structured, so taxes can mimic the impact of minimum prices while ensuring the resulting revenues go to the government and not firms.”?The IFS said it was “desirable” to reform alcohol tax based on alcoholic strength across drinks categories as a price-control mechanism, to send extra revenue into the government rather than industry coffers.

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