Multiples sell spirits at below '95 prices

05 September, 2008

Christine Boggis

Spirits prices in the off-trade have risen 2% in the past year - but supermarkets are still selling leading brands at less than

they charged in 1995, OLN can reveal.

There was a modest price rise across the board in spirits, according to the latest Nielsen figures - to Aug 9 - published in OLN's Spirits Report. Malt Scotch whisky saw the biggest increase at 5%, while liqueurs and specialities was the only category to see deflation of 1%.

But an OLN online price survey found

leading brands such as Smirnoff Red, Baileys, Gordon's and Bacardi are being sold cheaper in Tesco and Asda this week than they were around the same time of year in 1995.

Each of these brands was on offer at £9.98 in Asda and £9.99 in Tesco, compared

with average 1995 prices of £10.73 for Smirnoff, £11.73 for Baileys, £10.50 for Gordon's and £11.55 for Bacardi.

Those prices include the 55p duty hike announced in this year's Budget, which pushed excise duty per litre of pure alcohol up to £21.35, compared with £20.60 in 1995. A decade-long duty freeze from 1997 meant duty rates in 2005 were lower than those of 1995, at £19.56 per litre of pure alcohol.

Nielsen consultant Graham Page said the trade could expect to see multiple grocers keeping prices low in the future, unless the government finds some way of forcing them to change their business model. Meanwhile, a trend towards take-home and

premiumisation would continue to push average prices up, as would inflation in production, transport and other business costs .

"The business model

the supermarkets operate is

like a bank - you feed money in to them like a deposit and they feed back goods and groceries. Booze, which is priced at a premium in the on-trade, is given away in the off-trade to fill a basket with shopping," he said.

Page added that massive inflation in the cost of staple diet goods, which supermarkets have been forced to pass on, and increased competition from deep discounters

is likely to make the multiple grocers even more competitive on drinks.

WSTA spokesman Gavin Partington said he was surprised spirits were being sold at lower-than-1995 prices. "We have got to distinguish between the price it has cost to make, the wholesale price and the price it is retailing for," he said.

"We would expect the end price for spirits, as with other alcoholic drinks, to have gone up because raw materials costs have been increasing. "

OLN Spirits Report 2008, page 21




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