Warning on hidden impact of new alcohol pricing law
CONSUMERS face paying more for mid-market drinks brands in a hidden impact of the Scottish Government’s minimum pricing policy, it has been claimed.
Last night industry experts said brands not directly affected by the proposed price of 50p per unit would increase in cost as manufacturers adjust their prices to reflect the changed market.
Stephen Doyle, a senior lecturer at the Caledonian Business School in Glasgow, said the policy announced by Health Secretary Nicola Sturgeon yesterday, whereby prices would increase for the cheapest brands, would have a knock-on effect for consumers buying mid-range spirits.
Under the 50p-a-unit plan, a bottle of Tesco Value vodka would rise from £8.72 to £13.13, just a few pence off the price of classic brands such as Vladivar.
A bottle of Tesco Value whisky would also increase, from £9.97 to £14, around £1.50 less than a bottle of Bell’s and £3 cheaper than Famous Grouse.
However, Mr Doyle said firms would be in a dilemma as to whether they should attempt to attract drinkers previously paying the least for products, or hike their prices to differentiate from “bargain booze” products. He added that he expected prices to rise “slowly and gradually”.
Mr Doyle said: “There will be a shift in price but it won’t be reactive. It will have to be strategic. It’s a dilemma because, on one hand, manufacturers have the opportunity to increase their market share with customers migrating upwards.
“But, at the same time, these brands need to be clear about why they are better and their product is distinctive.
“When prices go up at the bottom they also increase further up.”
A senior industry source backed the view, adding: “It’s a good opportunity to put prices up because the duty in the UK means margins are really tight anyway.
“Officially, the industry is opposed to it but secretly most folk [in the business] will be delighted. I think it’s a good thing personally but I’d rather see it happening across Europe too, because it’s going to cause chaos, and we had to deal with this before when the EC came into being.”
Another insider said a rise was “inevitable” for standard whisky pricing.
Attempts have been made to dampen speculation of a cross-border black market, on the basis of the fuel costs to England and back, the nature of the alcohol products with the biggest rises in price, and tight profit margins.
The Scotch Whisky Association said it could not comment on individual brands or marketing, but said the industry wanted differentiation and “would change”.
It comes as the Scottish Government repeated its denials of claims minimum pricing is illegal, insisting it was “confident” the pricing complied with European law on health and social grounds. The SNP administration, which has not published its legal advice, has said the EC made clear its laws did not prevent the policy.
Meanwhile, the Government was accused by the right-wing Adam Smith Institute of a regressive charge that would treat drinkers “as if they’re children to be nannied by the Government”.
Health campaigners, the police, the Scottish Licensed Trade Association, Molson Coors and Greene King breweries have backed the new price.
Labour’s Shadow Public Health Minister Diane Abbott said the Westminster Government, which is considering a 40p minimum price, should now match Scotland’s 50p.
Scottish Labour, which is alone at Holyrood in opposing the proposals because it claims they would mean a windfall of up to £150 million for the big supermarket chains, said of the apparent cross-border party split that it would do what was “best for Scotland”.
Dr Brian Keighley, chairman of the British Medical Association in Scotland, said minimum pricing could help to end the heavy-drinking culture, which causes almost 3000 deaths from alcohol-related illness every year.
A Sheffield University study said that, over 10 years, it would result in 300 fewer deaths a year and hospital admissions would drop by 6500, leading to health service savings of £942m.
Ms Sturgeon said: “Now is the time to tackle the toll Scotland’s unhealthy relationship with alcohol is taking on our society.”