Scotch Whisky Association fights to scrap MUP plans

21 February, 2014

The Scotch Whisky Association has vowed to fight tooth and nail to see the proposed minimum unit pricing policy axed in Scotland.

The trade body said its home market is a key battleground because if it were to lose a court battle on a public health matter in Scotland it would set a dangerous precedent on the international scale.

The SWA has appealed against the measure and it could spend years going through the various appeal courts.

Chief executive David Frost, who is six weeks into the job, said he was intrigued by the SWA because it places as much emphasis on trade protection as it does on trade promotion.

The SWA is typically fighting around 70 cases around the world at any one time and spends roughly £1.5 million a year on legal fees as it seeks to break down barriers to trade in emerging markets and quash counterfeiting.

But it said that if it loses a key battle at home, it would “undermine our international agenda” and the knock-on effects in emerging markets like South Korea could be highly damaging. 

Frost said: “We don’t think minimum unit pricing will work on a public health basis. It doesn’t do the job it’s supposed to.”

He said targeted interventions instead of scattergun policy like MUP would get to the heart of the matter in a more effective way.

Frost added: “Although we are a premium product we think it’s important that the industry deals with social problems. We are serious about promoting responsible drinking.

“The number of deaths caused by alcohol has fallen consistently since 2008. Consumption by young people is falling. Admissions to hospital are falling.”

He also urged the UK government to scrap the duty escalator, which sees tax on alcohol automatically rise at 2% ahead of inflation each year.

George Osborne axed the escalator on beer last year and rode a wave of good publicity in pubs across the UK, but Frost said it was time to scrap it on other products like spirits and wine.

“We are trying to suggest to the UK government rather strongly that the duty escalator has run its useful life,” he said.

“For every £5 in a bottle of Scotch whisky, £4 is tax. That makes it one of the most tax products around. We would like the duty escalator to be stopped.

“We think this level of taxation is going to crush the market.

“The UK is our third-biggest market but it’s fallen 12% over the last three years. It needs to be vibrant and not crushed.

“It seems strange to heavily tax a product that has to be from Scotland and a lot of the supply chain comes from the UK. We think our argument is strong.”

The Treasury has given no indication as to whether it might be persuaded to scrap the escalator.

But one of the most vocal health lobby groups, the Alcohol Health Alliance, said this week that Osborne’s resolve might be weakening in face of industry pressure to scrap duty escalator.

Frost said: “The Treasury never gives anything away. It’s very difficult to tell. We have had decent opportunities to make our case. It’s our job to talk to as many people who influence this decision as we can.”

He also hit back at health lobbyists who called the UK government consultation on introducing MUP in England and Wales “a sham” and said alcohol lobbyists enjoying “too cosy” a reputation with the government killed it off before it had a chance.

“It doesn’t seem odd that the government should listen to the industries that will be affected by policy,” he said. 




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