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Who profits from Scotland’s minimum pricing?
When she announced the 50p per unit of alcohol as a minimum price in Scotland, Nicola Sturgeon, the Scottish health secretary issued guidance on the effect on retail prices if the legislation comes into force as planned next year.
The price of 4x440ml cans of Tesco strong cider will go up by £2.87 while 70cl of Tesco Value vodka will increase by £4.41.
Meanwhile, 4x440ml cans of Carlsberg Special Brew will rise by £1.13, as will a similar pack of Tennent’s Super Lager.
A bottle of Silver Rock Chardonnay will increase in price by £1.50. No premium branded wines and spirits will be affected as they are already priced above the minimum level.
What Ms Sturgeon did not address, however, was who would profit from the extra revenue per bottle.
The Scottish Nationalist Party government north of the Border has been very explicit not to label the increases as a tax or duty rise – there is doubt over whether Holyrood has the authority to levy such an impost.
So it is focusing attention on the planned increases as a health measure designed to reduce the burden on the NHS caused by binge drinking.
It also hopes that this tactic will push the plan under the wire of the EU’s competition laws. That means the extra revenue will not end up in the Scottish Exchequer.
In the guidance notes, Sturgeon’s office sought to sidestep the question of who will profit.
“It will be up to producers and retailers to negotiate the price of contracts between them,” it said. “The only direct effect of the legislation will be on what price is charged to the consumer, not what level of price is agreed earlier in the supply chain.”
That has brought howls of derision from brewers, importers and producers alike, none of whom wished to be identified for fear of upsetting their supermarket clients.
“Anyone who thinks the big retailers will give up even a penny of the increase to producers is mad,” said one. “It will all go to improving the supermarkets’ margins. They will still want to drive down the prices they pay us.”
Even more derision of Holyrood’s thinking stemmed from the Scottish Health Department’s assertion that “the introduction of minimum pricing puts small retailers on a more level playing field with the big supermarkets.
Currently the supermarkets are asking the public to subsidise drinkers with their deep discounting of alcohol, which has to be paid for elsewhere through higher prices on other goods,” it said.
“That is madness,” said a leading importer. “It is an admission that the supermarkets have been a prime cause of binge drinking through deep discounting and loss leaders, yet they are going to be rewarded through higher prices and wider margins at the till! Do they make donations to the SNP?”
Another said that he knew of at least one company examining the possibility of taking premises on the English side of the Border to supply Scots seeking to beat the minimum prices when they come into force next year. “After years of the Calais Run, it’s now going to be the Carlisle Run,” he said.
A fourth said: “How ironic. In the week when Tesco told its 5,000 top managers that they are only going to get 17% of their possible maximum bonuses because of poor results, the SNP is guaranteeing that soon their margins on alcohol will be very healthy. Pun intended,” he added.
Everything the article says is true, however, from a consumer point of view, why pay more for the usual cheap wine only more expensive if they can get a better wine at the same price from someone else?
There is no doubt as to whether or not the Scottish government has the right to alter alcohol duties, as this power is reserved to Westminster.
The article also leaves out the related Supermarket windfall tax that is due to pass into law in Scotland.
Put two and two together. The ScotGov don’t have the power to raise duties, but they do have the power to create a new tax against supermarkets… What will the outcome be? It becomes more expensive to binge drink, supermarkets must pay a windfall tax on their profits though small retail outlets won’t, folk are more likely to go to the pub since the price differential between getting pissed at your mates place and going to your local has reduced.
Considering the circumstances, doesn’t sound like a bad policy.
Also, there is no such thing as a “Scottish Exchequer”. Exchequer is a colloquial term for the Treasury, which Scotland hasn’t had since 1708.
It’s hard to take this article seriously when you are clearly unsure whether or not Scotland has the right to alter duties (it doesn’t), forget to mention something so pertinent as the Supermarket windfall tax, and make the schoolboy error of assuming that Scotland has a treasury.
Lastly, as an English company, it would have been enlightening for your readership if you had mentioned the fact that all three English political parties support minimum pricing in England, though I doubt they’ll do anything to irritate their supermarket friends…
LAUGHABLE – Carlise Run – will the petrol be the same price too? AND after independence will there be border checks to limit cheap booze coming in OR will the ToRIES have already done the samr thing south of the border to take advantage
The worst thing about this is that it hasn’t been thought through from a consumer perspective. If a wine that was £3 becomes £5, it will sit on the shelf next to a £5 wine that was originally £5. The consumer won’t know the difference. The retailer, doing hos job properly may look to reduce duplication. Which one will they keep, the £5 wine “worth” £5, or the £5 wine “worth” £3, but with an extra margin for them? With the windfall tax to pay, who could blame any retailer for keeping the higher margin wine, they somehow need to create more margin to pay the tax. So the consumer will end up paying more for wine to indirectly fund that tax despite what the Scottish government say.
You point out that the price of strong lagers will increase by very little but an important point missed is that ‘Buckfast British Wine’, or ‘Buckie’ as it is referred to, for many years the target of the anti alcohol lobby, should actually decrease in price by up to £ 1.20 per bottle as it is already more than 50p per unit.
Its a funny old game.!
MY WIFE AND I ARE PENSIONERS AND EACH WEEK BOUGHT A 3 LITRE PACK OF PERRY AT £5.40 IT NOW COSTS £10 SO THERE BY TAKING £234 A YEAR FROM OUR INCOME THANK YOU .SO IN ANY FUTURE ELECTIONS WE WILL DEFINITLY NOT VOTE FOR THE SNP EVER AGAIN AND I AM URGING OTHERS TO DO THE SAME ROB
FACT- THE MORE AFFLUENT SCOTTISH CITIZENS DRINK MORE PER HEAD THAN THE POORER ONES- OBVIOUS WHY! THE POOR CAN HARDLY AFFORD TO PUT FOOD ON THE TABLE!!!
THE INCREASE IN ALCOHOL PRICES ALSO DOES NOT INCLUDE THE CHOICE WINES AND SPIRITS KNOCKED BACK BY THE WEALTHY. – THEREFORE THEY ARE BEING SHIELDED FROM THE ACCUSATIONS USED TO VILIFY THE POOR. IF IT’S ALL ABOUT HEALTH AND ALCOHOL ABUSE THE MORE EXPENSIVE DRINKS SHOULD AT LEAST DOUBLE IN PRICE TO PROTECT THE WEALTHY FROM THEIR ACKNOWLEDGED ALCOHOL ABUSE. THE POOR ALREADY DRINK LESS PER HEAD THAN THEIR RICH COUSINS. THERE ARE DEVIOUS BACKGROUND LIES AFOOT TO LAY ALL THE BLAME FOR ABUSE ON PENSIONERS, THE WORKING POOR, AND THOSE ON BENEFITS. DOCTORS ARE ASKING THE LATTER ‘DO YOU DRINK?’ WHEN THE POORER PEOPLE HAVE AN AILMENT. IF THE ANSWER IS ‘YES’ THEY ARE CALLING THE AILMENT ‘ALCOHOL-RELATED’ WITHOUT A SHRED OF PROOF. THE PROFESSIONS ARE NOT BEING ASKED THIS QUESTION, SO THEY ARE NOT BEING JUDGED. THE VERY SCOTTISH GOVERNMENT IS STEALING FRON THE TAXPAYER TO SUBSIDISE THEIR EXPENSIVE BAR, AND THERE ARE EIGHT SDUBSIDISED BARS IN WESTMINSTER, COSTING THE TAXPAYER BETWEEN £3-4MILLIONS PER ANNUM. MINIMUM PRICING IS PURELY AND VINDICTIVELY AIMED AT STOPPING THE POOR HAVING THE SOLACE OF A DRINK WHILE THEIR AFFLUENT BRETHREN GET ABSOLUTELY SKULLED “PARTYING” AND ARE PROTECTED BY THEIR WEALTHY GOVERNMENT WITH LIES!!!
The SNP are loonies. But then all the establishment parties are.