The politics of drinking
           September 4, 2012

Minimum pricing and a divided drinks industry

Whether it actually happens or not, the debate around minimum unit pricing continues to make all sorts of waves and has exposed many of the deeper political questions that underlie alcohol policy.

As I write, Andrew Lansley has just shuffled out of the Department of Health and Jeremy Hunt shuffled in. You would like to think that the NHS reforms had something to do with it, but I reckon Lansley’s fate was sealed when he stood up against minimum pricing, causing the government to switch to the Home Office to launch its alcohol strategy. That must have been some humiliation.

(I’ve no idea about Hunt’s view of minimum pricing, by the way. He’ll probably just ask Rupert Murdoch.)

More surprising, at least for most observers, were the results of a BII survey among its members, independent publicans, that came out a whacking 77% in favour of minimum pricing. And 81% of those thought it should be set at 50p, higher than the 40p Westminster is touting.

Another recent survey, this time among convenience stores and corner shops, showed 60% back minimum pricing.

It doesn’t mean, though, that publicans and shopkeepers have suddenly become health policy wonks. Both pubs and smaller shops believe, with good reason, that their businesses are being hit by cheap supermarket booze. They see minimum pricing as a way of levelling the playing field. If health comes into it at all, it’s a very poor second.

They are probably being rather optimistic there. Even if the unit price were high enough to make a significant difference the supermarkets have the power to deploy a range of promotional strategies to offset any disadvantage, funded by the additional profit margin they’ll get from minimum pricing.

Alcohol Policy UK has put together a good round-up of the various complexities involved.

But the idea that the supermarkets should be somehow reined in is a powerful one, and has its supporters among larger pub operators, led by Greene King’s Rooney Anand.

At the other end of the argument sits Tim Martin, boss of the J D Wetherspoon chain, who takes a more orthodox freetrade stance and is against any government interference in pricing.

So you see, the drinks industry is split. And in more than one dimension. The idea that the minimum pricing debate is made up of health campaigners on one side and the drinks industry on the other is wildly mistaken.

As is the repeated assertion by medical temperance that the drinks industry lobby is all-powerful in influencing government alcohol policy. Sure, we have a soft responsibility deal, but year after year the industry has mounted a campaign against duty increases at the Budget, and year after year it has failed to make the faintest impression. The current duty escalator, which fixes the hike at inflation plus 2%, not to mention 20% VAT, leaves the UK with one of the most punitive alcohol tax regimes in the drinking world.

That the industry is unable to unite as an effective lobbying force is a constant source of frustration to drinks manufacturers and retailers.

None of this means that the industry is driven by anything other than commercial motives. But those commercial motives are conflicted by different interests. It’s not just minimum pricing, either. There’s the question of volume versus value. While there are situations in which companies do want to sell more drink, in the longer term it’s about profitability, which is more often a matter of quality, or perceived quality, over sheer quantity.

Yet it’s in the interests of the health lobby to have a monstrous homogenous insatiable booze-peddling opponent to clarify its own case before government and the media.

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