Pub trade fury at below-cost plans

By Lesley Foottit

- Last updated on GMT

Related tags Pub trade Beer Alcoholic beverage

Supermarkets: allowed to sell cheap alcohol
Supermarkets: allowed to sell cheap alcohol
The pub trade is furious at Government plans to introduce a ban on below-cost sales that would still allow 38p cans of lager to be sold.

The pub trade is furious at Government plans to introduce a ban on below-cost sales that would still allow 38p cans of lager and £10.71 litre bottles of vodka to be sold.

The off-trade would still be able to sell such cheap alcohol because the Government is using the definition of below-cost as below the cost of duty plus VAT.

The Morning Advertiser​ reported back in August 2010 that Home Office officials saw this definition as the easiest to put into practice.

Pub trade officials and licensees have called for the cost of production to be factored in to the definition.

Pressure on pubs

The Campaign for Real Ale (CAMRA) said that the Government definition will do nothing to alleviate the pressure on pubs and allow supermarkets to continue to sell alcohol below-cost.

It called for the cost of production to be factored in, which it said would produce a price of 40p a unit — nearly double what is being proposed.

"Today's decision means pubs will continue to close as they are undercut by supermarkets selling canned beers at pocket money prices," said chief executive Mike Benner.

"A ban on selling beer at below duty plus VAT will have a negligible impact as supermarkets sell only a tiny proportion of beer at below these levels.

"CAMRA believes a floor price of around 40 pence a unit would be required to prevent supermarkets selling alcohol at a loss. The Government's decision to set a floor price of only 21 pence a unit is a betrayal of their previous promise to ban the sale of alcohol at below cost and means supermarkets will continue to be able to sell alcohol as a loss leader.

"The Governments appear all too ready to impose higher costs and regulations on well-run community pubs but are prepared to turn a blind eye to the irresponsible attitude towards alcohol expressed by the supermarkets."

Federation of Licensed Victuallers Associations operations director Martin Caffrey said: "To call 'cost' VAT plus duty is utterly incorrect. This wouldn't solve any of the issues of pre-loading or binge drinking.

"It's almost worse than nothing because it will fend off any proper legislation [to tackle cheap supermarket alcohol]."


Michael Kheng, boss of Lincolnshire bar group Kurnia said: "It is ridiculous. There needs to be a cost element in there. I don't think any supermarkets are selling at below duty and VAT — if you take those factors out you are left with a few coppers.

"The Government proposals are a cop-out — it is totally unfair."

Below-tax selling

Meanwhile, Molson Coors UK and Ireland agreed that the ban does not go far enough. "While we welcome the Government's intent, this announcement is a ban on below-tax selling only, not a ban on below-cost selling," said chief executive Mark Hunter.

"Tax is not a proxy for cost so this will not address problem prices and could legitimise driving them even lower. We are committed to working with Government to find effective solutions that build respect for alcohol and address the problems caused by excessive drinking without affecting the majority of responsible consumers.

"We believe that a ban on below-cost selling where a nominal cost is defined would address key policy issues, and be an effective, enforceable, easy to administer solution."

Worst excesses

However, the British Beer and Pub Association said the ban could prevent the worst cases of cheap off-trade alcohol, but more must be done to help the pub trade.

"This is a clear measure that can be implemented quickly and will stamp out the worst cases of below-cost selling," said chief executive Brigid Simmonds.

"However, it will not have a significant impact on low-priced alcohol in supermarkets. With 70% of alcohol now sold in the off-trade, there is a real need for the Government to do more to support the pub.

"The Chancellor's March budget gives the Government a real opportunity to support pubs in these tough economic times — by freezing beer duty. This will protect 10,500 jobs, whilst giving a real boost to an integral part of British communities up and down the country."

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