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News
Minimum pricing would “kill our business”
Government proposals for a minimum price per unit of alcohol would “kill” Direct Wines’ business, according to the company’s managing director.
The Laithwaites shop at Vinopolis
Speaking to The Daily Telegraph, managing director of Direct Wines, the UK’s largest direct-sales wine merchant, Glenn Caton said:
“Our typical customer is middle-aged and middle class. We cater to successful, responsible citizens who like to enjoy a glass of good wine and like to get good value when they buy it.
“These are not the people who go out and get drunk and smash up town centres and cause trouble, but these are the people that David Cameron wants to penalise. It’s crazy and it will kill our business.”
In a bid to reduce irresponsible drinking, the UK Government has proposed a 45p minimum price per unit of alcohol and a ban on deals where customers get a discount for buying more than one bottle of wine.
Direct Wines sells over £300m cases of wine a year globally, and more than £200 million in the UK through subsidiary companies such as Laithwaite’s Wine, Virgin Wines and the Telegraph Wine Club.
The majority of its cases are sold at a discount of between 5-15%.
Pouring wines at Laithwaites at Vinopolis. Credit: Denise Medrano.
Under the Government’s proposals, retailers would be banned from selling a dozen bottles of wine for less than the price of 12 individual bottles – a regulation that would impact significantly upon Direct Wines’ business model.
Owned by the Laithwaite family, Direct Wines employs 1,000 staff and, according to Caton, pays £100m a year in tax.
“If the Government implemented this policy, all of that would be at risk,” Caton told the DT.
He believes David Cameron’s plans to restrict the sale of alcohol contradicted a pledge he made in his speech on reforming the European Union last week, in which he talked of “completing the single market” as his “driving mission.”
“What the Government wants to do with alcohol sales is totally against the creation of a single market in Europe.
“If the Prime Minister’s plans go ahead, British people will be unable to get the best deals where they live, and people will be forced to buy drinks abroad in French hypermarkets,” Caton said.
Meanwhile, the drinks industry is to launch a consumer-facing online, TV and radio campaign in opposition to the government’s minimum pricing plans.
The WSTA has gained the support of Sainsbury’s, Asda, Morrisons, Diageo and SAB Miller to launch a consumer campaign under the slogan: “Why Should Responsible Drinkers Pay More?”, with a dedicated website that went live this morning.
On a poll on the site, 82% of consumers believe the Government’s minimum pricing plans are unfair.
In addition to information about how minimum unit pricing will affect beer, wine and spirits pricing, the site will give advise consumers on how to send a letter to their local MP calling for support on the issue.
If 45p minimum unit pricing goes ahead in the UK, a bottle of wine at 13% abv would cost at least £4.39, a bottle of 70cl vodka at 37.5% abv would cost £11.81, and a 70cl bottle of whisky at 40% abv would rise to £12.60.
“We need people to understand what the government is proposing and for their voices to be heard. Minimum pricing is unfair, probably illegal, and won’t tackle the problem of binge drinking,” said WSTA chief executive Miles Beale.
The Government’s alcohol strategy consultation ends on 6 February with potential legislation expected to be revealed in the Queen’s Speech in May.
Scaremongering again. Do Direct Wines only sell really cheap wines?
Do the sums, a 13.5% wine has fractionally over 10 units in a 75 cl bottle, which at 45p a unit equates to £4.56 a bottle, or £54.68 a case of 12, presumably VAT will need to be added, so £65.61 to the consumer plus any delivery charge.
Interestingly the cheapest thing I could find in two minutes on the Laithwaites web site is a “Clearance mix” of reds and whites is £65 a case with free delivery. So I don’t see the problem. MUP might even lead to less marketing by discounting, which can only be good for the trade.
DW : MD
“Our typical customer is middle-aged and middle class. We cater to successful, responsible citizens who like to enjoy a glass of good wine and like to get good value when they buy it.
“These are not the people who go out and get drunk and smash up town centres and cause trouble, but these are the people that David Cameron wants to penalise. It’s crazy and it will kill our business.”
Comment
If “DW” thinks so highly of their customers why do they continue to purchase and offer the lowest quality wines from around the world. I think there should be a minimum pricing for alcohol and also a law demanding content labelling like there is on all foodstuffs. Then lets see what the typical DW customer does with his/her pound regarding the wines being offered to them.
With £1.92 UK duty on every bottle plus the cost of buying the wine from the grower, transport, labelling, bottling, marketing, advertising, staff salaries, company profits, etc you don’t have to be a brain box to work out how cheap the wine in the bottle must be in the first place.
Then to label everyone who doesn’t buy from DW a thug is a disgrace and dare I say shows yet another “Wine Snob” doing more damage to the wine industry through red corduroy trouser bigotry than any responsible alcohol law could. I thought the wine industry was trying to engage with the public in a responsible way not alienate by using these type of comments do! Shame on you sir………
The answer to campaign question “Why should responsible customers pay more?” is they already do!
Binge drinking has very little to do with the price of alcohol – its unfortunate but years of poor govt policy has produced a generation of plebsn imbeciles and yobs……..rather tackle the source of the problem and introduce some discipline in schools in to produce a society with good behaviour traits and decent manners!
“Under the Government’s proposals, retailers would be banned from selling a dozen bottles of wine for less than the price of 12 individual bottles – a regulation that would impact significantly upon Direct Wines’ business model.” Perhaps this will put an end to the practise of initially selling wine at artificially inflated prices so that it can be discounted back down to its true price. This sort of discounting has led to confusion amongst average consumers who now do not really know the real value / cost of a bottle of wine. This sort of discounting along with general increased costs, duty and VAT, whilst retailers strive to hit certain (low) price points, means that the consumer is getting less and less wine for their money. I say bring on clarity and minimum pricing!
Government-set minimum prices will serve to foster black markets, extra-legal alcohol, and tax dodging. Even worse, they are simply incompatible with economic liberty–free people don’t tolerate this type of regulation. Gross!
I agree with bring on the clarity, its my favorite tipple
Can we please be the ones to tell Berry Bros & Rudd that in future, they have to describe their pricing not by the case, but by the multi-pack?