Scottish plan is cause for pessimism

21 September, 2007

Nigel huddleston on scotland's proposed ban on cheap drink

Nigel huddleston on scotland's proposed ban on cheap drink

Unless Heinz produces baked beans with a port wood finish or Warburtons comes up with an over-ice serve for its sliced wholemeal, it's hard to disagree with Scottish Justice Minister Kenny MacAskill's assertion that "alcohol is not just another commodity and shouldn't be treated in the same way as buying a tin of beans or a loaf of bread".

Whether putting wine by the fish counter or trimming a couple of quid off the price of two bottles of Baileys at Christmas turns it into a commodity is debatable, but MacAskill's SNP government thinks it does and plans to outlaw multi-buys and secondary siting of alcohol to discourage excessive drinking.

MacAskill pledged to "turn off the tap of cheap drink" by early next year, putting a stop to the trade's popular three-for-£10 offers on wine, all alcohol bogofs and threatening Thresher's three-for-two policy. The move has also raised fears of cross-border shopping, which might feasibly see Berwick-upon-Tweed cast as the new Calais and white vans scooting down the A7 from Cumbernauld to Carlisle.

Jeremy Beadles, Wine & Spirit Trade Association chief executive, said: "You're likely to see life in the border regions becoming very difficult for off-licences because they're having to com pete with businesses that have the full range of promotions at their disposal. If you get interference in the marketplace you get unintended consequen ces of your actions."

Beadles also argued that the internet shopping between the two countries would be difficult to police.

"They haven't really thought through the implications for internet businesses," he said. "Scottish internet businesses won't be able to compete with English promotions."

Lloyd Stephens, trading director at Thresher, was sceptical about the spectre of cross-border shopping and talked down the impact the end of three-for-two in Scotland might have on its position in the marketplace and its buying power. "If the legislation means we can't run those promotions then we won't," he said. "I know our supplier base is responsible and I hope and believe they would be supportive."

These are politically hyper sensitive times for suppliers on anything to do with pricing, and individual companies have been keeping their cards close to their chest.

Steve McAllister, managing director for multiples at InBev UK, described the Scottish government's plans only as "an interesting development" and added: "We encourage responsible drinking and believe that pricing on alcohol should support and reflect any community's attitude towards binge drinking and antisocial behaviour."

Stephens at Thresher said the bigger problems would be posed to multiple grocers by the plans to ban secondary siting of alcohol alongside food.

"The grocers have done a great job in this area and it would be a much bigger challenge for them," he said.

But Beadles at the WSTA had a more pessimistic view of the future for all ­retailers with stores in England and ­Scotland.

He said: "From a trading perspective, businesses that are operating in both ­jurisdictions will need to offer a completely different business model. They're going to need different promotional plans and might even need different IT systems, separate marketing and separate deals with suppliers. It adds a whole range of complexity to business."

The new rules on merchandising are scheduled to come in from 2009 and would require stores to introduce "a specific display area" for alcohol.

Justice minister MacAskill said the Scottish government would "stop shops displaying beer all around the store or cross-merchandising wine in the pizza counter to entice impulse buyers to buy and drink more alcohol".

Beadles said abolishing links such as "mince pies with port at Christmas" was nonsensical. "The people attracted to that sort of promotion are not those that misuse alcohol.

"One of the key messages we have is that it's more reponsible to consume ­alcohol with food, so what is the logic there? Northern Ireland have had this for years and it makes no difference.

"It might mean you can't put alcohol and a non-alcoholic product in the same fridge. All that means for a small retailer is that you'd have to buy a new fridge. It's not clear what the benefit is to anyone."

And even when all the operational difficulties have been scrutinised, there's a more fundamental issue at stake.

"Price issue is not key in driving alcohol misuse," said Beadles. "We clearly have one of the highest taxes on alcohol in Europe and the fact that countries with lower taxes don't have some of the problems we have indicates that pricing by itself is not the key issue."

And even if it was, banning multibuys could simply force retailers down other equally aggressive promotional routes.

"The only way will be to compete on a per unit price basis. All it leaves you with is pricing and discounting, so it could bring about precisely the opposite of what's intended."

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