Off-trade can beat below-cost ban

By John Harrington

- Last updated on GMT

Related tags Sales Price Public house Wsta Bbpa

Supermarket deals: the debate goes on
Supermarket deals: the debate goes on
Supermarkets could still sell alcohol at rock-bottom prices if below-cost sales were banned using a definition supported by off-trade chiefs....

Supermarkets could still sell alcohol at rock-bottom prices if below-cost sales were banned using a definition supported by off-trade chiefs.

Selling beer for about 54p a can and wine for £2.33 a bottle would be permitted if the new Government banned sales below duty plus VAT, the definition supported by the Wine & Spirit Trade Association (WSTA).

It poses questions about the off-trade's commitment to move away from deep discounting.

The news follows confirmation that a ban on below-cost sales will feature in the Police Reform & Social Responsibility Bill. The measure also received high-profile support from Tesco boss Terry Leahy.

WSTA figures show that average duty on a bottle of wine is £1.69, and VAT is 64p, making £2.33 in total.

The British Beer & Pub Association (BBPA) estimates that duty plus VAT amounts to about 70p for the average pint, or 54p for a 440ml can.

WSTA chief executive Jeremy Beadles said: "The WSTA supports a ban on selling alcohol below the level of duty plus VAT, on the basis that these are both consumer taxes and, therefore, the cost should be passed on to the consumer."

Another reason is that calculating cost price any other way is almost impossible because there are so many variables.

But BBPA communications chief Mark Hastings said cost price could be determined by stores telling a Government agency in confidence how much they pay.

"The Competition Commission currently handles such data in confidence so it can be done. This is the system that operates in Spain — so if they can do it, I'm sure we can!

"The bottom line here is that you cannot ignore production and distribution costs and margins. That would be illogical and unsustainable."

Writing in the Telegraph, Leahy said: "We welcome the new Government's commitment to act on below-cost selling of alcohol and today I pledge that we will support Government-led action to make this happen across the UK. We will also support any future discussions on a minimum price for alcohol."

But Association of Licensed Multiple Retailers chief Nick Bish slammed Tesco's "hypocrisy" by offering deals such as two packs of beer for £16, or just 67p per pint.

Meanwhile, minimum pricing — which is not included in the new coalition Government's plan — has received support from both Mitchells & Butlers and Greene King, as well as the World Health Organisation.

• Nearly four out of five consumers (78%) pre-load most of the time, and 20% spend less in pubs when they go out, says a new survey from Zolfo Cooper. The trend will increase as the World Cup nears, says the firm, which urged pubs to "differentiate" their offer and not just rely on price.

Related topics Licensing law

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