TAX EQUALITY

Supermarket vodka sold at less than 50p per measure

By Stuart Stone contact

- Last updated on GMT

Budget opportunity: the on-trade is making an appeal to Chancellor Philip Hammond
Budget opportunity: the on-trade is making an appeal to Chancellor Philip Hammond
Research by The Morning Advertiser and figures from CGA Insight detailing average on-trade pricing have revealed that supermarket vodka is being sold at the equivalent of less than 50p per single measure.

The Morning Advertiser​ compared the average cost of a 25ml measure of standard, premium and super-premium vodka in the on-trade to the average cost of similar spirits in supermarkets – calculating the average standard, premium or super-premium price by comparing the cost of three brands per category in four different major supermarket chains.

Findings revealed that while the average 25ml measure of standard vodka, such as Smirnoff or Russian Standard, would cost consumers £2.61 in the on-trade, the same brands are being sold at the equivalent of 48p per 25ml measure in supermarkets.

Based on the price of a 700ml bottle of standard, own-brand vodka, many supermarkets offer standard vodka at around £1.64 per 100ml – or the equivalent of 41p per 25ml measure.

Moreover, while a 25ml measure of premium vodka such as Absolut would cost on average £3.43 in the on-trade, the same volume and standard in the off-trade would cost 65p on average.

Super-premium vodka

Additionally, the average super-premium vodka – such as Cîroc or Belvedere – costing £4.17 per 25ml measure in the on-trade would cost the equivalent of £1.36 per measure in supermarkets.

The discrepancy in price has been attributed to the fact that pubs as subject to a broader range of costs and more stringent stipulations by a spokesperson for UK Hospitality.

“Alcohol duty is paid by the manufacturer and is the same regardless of whether the product is intended to be sold in the on or off-trade. The issue is that off-trade outlets, in particular, huge supermarkets, are able to absorb or pass on those costs more easily.

“Additionally, pubs are battling against other costs such as unfair business rates, VAT and wages in a labour-intensive sector that raises costs even more.

“It is this cocktail of costs that put pubs, and other on-trade businesses, at a disadvantage compared to supermarkets and why large off-trade venues are able to sell alcohol at such dramatically low prices.”

With business rate relief set to end in March 2019, it is feared that failure by Chancellor Philip Hammond to act in the October 29 Budget could be threaten thousands of pubs and tens of thousands of jobs​ with the number of pubs closing expected to increase beyond the current 29 per week.

With wine and spirit sales up 5% year on year and research by CGA Strategy on behalf of Wine & Spirits Trade Association (WSTA) revealing that there are now, on average, 36 spirit brands behind the bar of a typical pub, many operators have called for a freeze duty in order to sustain the spirits boom.

WSTA chief executive Miles Beale added: “The Chancellor can once again show his support for the great British pub by scrapping his plans to raise already punitive duty rate.

Wine and spirit industry

“Wine and spirits are increasingly vital to the prosperity of our historic British pubs with wine and spirit duty accounting for more than a third of annual pub sales. We are calling on Philip Hammond to recognise the importance of wine and spirit industry and help save our British pubs by freezing duty, allowing them to reinvest and stay in business.

“It is proven that freezing alcohol duty has brought in more revenue for the Treasury coffers, not less. So a duty freeze makes sense for everyone – from the Chancellor, to pub and bar owners, and consumers.”

Charles Ireland, general manager of Diageo for Great Britain, Ireland and France, said: “We call upon the Chancellor to support the industry and freeze alcohol duty in his forthcoming Budget.

“Half of the turnover of pubs is generated by the sale of spirits and wine, with spirits accounting for one third of on-trade sales.

“However, 74% of the total cost of a bottle of Scotch is tax and British drinkers pay over 40% of all the alcohol duty collected in the whole of the EU, despite only making up 16% of the population.

“Today’s Budget is an opportunity for the Chancellor to address these issues by implementing a freeze, providing producers with certainty and encouraging further investment.”

Related topics: Spirits & Cocktails

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