No half measures

A growing number of pubs have been tempted into believing that, where spirits are concerned, there really is a substitute for the real thing.

But as recent high-profile court cases show, filling leading brand name spirits bottles with cheap cash-and-carry brands and passing them off as the genuine article can land licensees in trouble up to their necks.

This year magistrates in Market Harborough, Leicestershire, handed out the highest ever fines for such incidents of spirits substitution when Ghassan Fakih, licensee of the town's Bell Inn, was found guilty of topping up Smirnoff bottles with Stalingrad vodka, putting White Diamond rum in Bacardi

bottles and pretending that Grosvenor gin was Gordon's - a fine of £3,000 for each offence.

Further deterrents

A few weeks earlier, two East London licensees received fines of £500 and £300 for offences involving passing off cheap spirits as Bacardi and Smirnoff.

The maximum fine courts can impose for each offence involving substitution is £5,000 and in the most recent cases licensees have been fined about £500. But as the majority of the 100 or so cases prosecuted each year involve two offences, the average total fine amounts to about £1,000.

The new licensing legislation also introduced the possibility of suspension or revocation of a licence for such offences. International Federation of Spirits Producers director Philip Scatchard says the only reason this hasn't happened yet is that cases can take up to nine months to reach court and the Act only came into force last November. "We're not going to see a flood of people losing their licences and it will probably only apply to people who keep offending, but it is a further deterrent," he says.

High price to pay

While the penalties are high, the incentives are obvious - in margin-stressed times, cheap brands can add that little bit extra to the profit line by charging big-brand prices for spirits those brands' owners would regard as being of inferior quality.

And it's especially appealing to many licensees who feel forced into offers on doubles by local promotional pressures.

Of course, most licensees have a conscience that guides them past ripping off customers in this way, but for those whose moral compass is set at a different angle, substitution is perceived as an inconsequential and victimless crime - the argument used to justify bogus insurance claims - or as carrying no risk of detection.

And perpetrators rarely seem troubled by the fact that a trading standards officer (TSO) can catch them out easily. To detect key spirit-brand ingredients, TSOs carry a dipstick-style kit, similar to the litmus paper used in school chemistry lessons, or a hi-tech electronic version. Recent technological developments have broadened the range of types and brands of spirits that can be checked. If the tests indicate a problem, samples are removed for more rigorous lab analysis.

The tests are supported by the International Federation of Spirit Producers (IFSP), a group comprising leading suppliers such as Pernod Ricard, Diageo and Bacardi Brown-Forman, who want to avoid their brands being tarnished by poor-quality serves and their drinkers being ripped off.

And their campaign has had some success: research carried out in 1999 showed that 8% of on-trade outlets were refilling branded spirits. The prospect of prosecution and being named and shamed in the local press has seen the number of culprits detected fall to 2% - a significant improvement, but still a statistic that sounds unpalatable to fair-minded members of the trade.

Self-defeating

The hard facts become more difficult to swallow when it becomes apparent that substitution can be linked with other fraudulent activity, including duty fraud.

Scatchard says: "I estimate that about 70-80% of spirits used for refilling are bought legitimately from the cash-and-carry store, or they are are cheapest-on-display or own-label from a supermarket.

"But some 'white van' trade comes across the Channel and there's a rising trend in

making spirits from illicit alcohol plants -

people are able to obtain ethanol from various sources and use their own 'brand' with some obscure name."

The IFSP estimates that detection and prosecution saves consumers about £25m a year - that's the difference between the price charged and the actual spirit's recommended price.

"We're doing our best to put a stop to refilling because these people are conning their customers and getting an unfair trading advantage over the competition. And in some cases they're putting their customers at risk of encountering bad alcohol. "

The message from suppliers is that while this scam may be tempting, it's ultimately self-defeating.

Maxxium UK marketing controller Phil McLaughlin says: "It's still an issue and will probably remain so - but ultimately, customers served with an inferior product will vote with their feet and move on."

Keep the customer satisfied

Beam Global Spirits & Wine managing director Adrian McKeon says that the scale of this growing problem is very difficult to assess, but he urges pubs to prioritise customers over the chance of making a fast buck.

McKeon says: "Retailers with whom we work closely appreciate how savvy modern consumers are in terms of brands, and conversely how fickle they can be when they are served a drink that fails to match their expectations - they're unlikely to hang around for another drink.

"Our advice is that substitution is simply not in licensees' best commercial interests - customer satisfaction is the most important factor driving loyalty and repeat business.

"The chances are that if an outlet is substituting, it doesn't consider customer satisfaction as a high priority."