Is it time to join the loss-leaders?

12 December, 2008

The legislative bandwagon for the licensed trade rolls on. Now fronted

by the Home Office, in cahoots with the Department of Health, the anti-alcohol agenda has hit centre-stage in the recent Queen's Speech proposals for a mandatory code of practice and a change in the licensing laws.

Although cut-price alcohol in supermarkets has made

the headlines in recent weeks, the proposals cut a far wider swathe than that. They involve both the on and off-trade sectors in almost equal measure, they suggest that a code will apply to all retailing of alcohol, including members' clubs, and they can potentially add a new level to the enforcement provisions of the Licensing Act itself.

No wonder

the WSTA's Jeremy Beadles

uttered a note of caution

after the announcements. While welcoming the

proposals, he wanted to ensure that " a retail code tackles the minority of irresponsible premises and doesn't just create new

layers of bureaucracy and red tape for the majority of responsible businesses, local authorities and our overstretched police forces."

Well, of course, it will do just what he fears. The reason for this is in the nature of legislation and quasi-legislation such as mandatory codes of practice. They do not differentiate in the way that he would hope. In particular, a code of practice, by its nature, applies to everyone, regardless of their social responsibility credentials. If it is backed by legal sanctions, there will be times when it hits the less guilty.

A good example is, of course, under-age sales. In the past, Off Licence News has published articles and letters about retailers who have either been caught by a "sting" or

have unwittingly had staff make a sale to a minor. These have not been deliberate acts and there was no criminal intent. But under the new proposals, just

two under-age sales made by anyone at the premises in a period of three months could jeopardise the licence. Remember that these are not two convictions - just two examples produced by the police.

The other important point is that a so-called "code of practice" of this kind is nothing of the sort. It is a set of conditions, breach of which will lead either to a criminal prosecution or at least a review of the licence, with possibly dire consequences. And as such a code will apply to everyone, regardless of size or trading style - it is not just the supermarkets

that will suffer.


have previously commented that voluntary actions within the trade tend to lead to legally

enforceable requirements.

The idea of Challenge 21 and Challenge 25 as trade-led schemes for combating under-age sales has now been taken up as a possible principle of the proposed new code, which would mean, in effect, that failure to follow one

of those schemes will in itself be an offence, irrespective of whether an actual sale has been made to a minor. Again, this will apply across the board, not just to the irresponsible retailers mentioned by the government.

Of course, if the code covers only unacceptable retailing practices then it would seem to fulfil

its function. But the problem is: what is unacceptable? And at what level? All licensed retailers use some form of discounting or incentive, including three-for-two and a free extra bottle or can. The negotiations between the trade and the government are likely to be difficult in this area if some form of marketing or incentive is still to be allowed in some circumstances. Otherwise, we reach the level of no deals at all and a flat-rate price for all products, which many responsible retailers - and their customers - would find entirely unacceptable.

What is also worrying in the Home Office briefing on this subject is the proposal to give extra powers to local authorities to curb or control the manner in which alcohol is promoted in local shops. Currently, of course, the licensing authority has no power to act unilaterally:

it ha s to wait for a responsible authority to seek review of an individual licence.

The Home Office seems to suggest that

it may be given more general powers to limit the sale of low-priced alcohol and to ban promotions or the display or advertising of discounted price offers.

The scope of the proposals clearly indicates that there will have to be changes to the substantive legislation to give effect to them, or to give further powers to ministers to make additional regulations.

So an amendment act to the Licensing Act seems to be on the cards, because some of the proposal affects the existing working of the principal sections of the Act.

Before this, of course, there will have to be a major consultation process involving trade representatives. What the licensed trade will have to decide, which will not be easy, is whether they all work together or whether the sectional interests which have already emerged will present a disunited picture to government. Supermarket bashing will have its attractions to many, but there is a wider threat. Do not use deep discounting as a loss-leader.

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