Top 10 ways the EU affects how we drink

As the UK prepares to vote on the country’s future place in the EU, we look at how Europe shapes the way we drink and affects how we buy and sell alcohol.

The EU and its associated institutions often have a direct influence on how we do business, how we drink, and what goes on a label. Yet in other areas, their influence is less than you might imagine.

Here we attempt to draw back the curtain on EU involvement: how it works now, and what might change if we were no longer members of the club.

Whether it’s excise duty, health policy, labelling or minimum pricing, we look behind the headlines and sort the rotten grapes from the pure spirit.

Cross-channel booze cruising

Part of our drinking and travelling culture for many years, this is the option to cross the border and buy alcohol for personal use at the prevailing duty rates in the country of purchase, within the EU.

If you buy booze online from France, for example, and have it sent to you in the UK, then UK duty rates prevail, but if you are accompanying the purchased alcohol yourself as you cross over the border back to the UK, then you can just pay the (lower) rates that prevail in France and across much of Europe.

If we left Europe, then the EU would be regarded as a third party country like any other, and your trip to France would be limited to much smaller purchase before you had to pay UK duty: 16 litres of beer, 4 litres of wine and either 1 litre of spirits or 2 litres of fortified or sparkling wine. Beyond that, and you’d have to pay full UK excise duty on your purchase.

Customs duty

For companies importing drinks from beyond Europe – if alcohol is imported into the UK from outside the European Union, EU Customs duty may also have to be paid in addition to UK excise duty.

The EU has some special deals with specific countries that allow tariff-free trade, so South Africa for example is allowed a certain level of tariff-free wine to arrive in the UK, but for many other countries there’s an extra cost to pay.

That said, when it’s broken down to individual amounts, the extra tax amounts to less than 10 pence per bottle.

Minimum unit pricing

Attempts to introduce minimum unit pricing for alcohol in Scotland were rejected when they fell foul of EU trade competition rules, although the ruling by the European Court of Justice (ECJ) did leave some leeway for further attempts to impose such a policy.

Essentially the judgment said the Scottish government had failed to demonstrate that they couldn’t have achieved the same effect of reducing harmful alcohol intake by increasing the excise duty rates first. So an option to raise duty rates further may be a route that can be explored.

At the heart of the debate was EU competition rules – imposing a minimum price on a unit of alcohol would theoretically take away any commercial advantage for a member state that can produce wine at a lower cost than another. As the mimimum rate is applied across the board, this would effectively be giving higher cost producers an unfair advantage.

If the UK was no longer a member of the EU, then we might not have to comply with ECJ judgements, although if we still chose to align ourselves with the European Free Trade Association (EFTA) then we’d still be under some obligations to toe the line.

Excise duty Directive

Currently the EU defines the categories that products fall into for duty purposes, and also sets the minimum excise duty rates that must be applied by member states in those categories. Beyond those mimimums, it’s up to the individual member states to set specific rates. For wine, a politically important sector in a broad swathe of EU member nations, that minimum duty level is zero. For other categories, like beer, cider and spirits, there are separate rates.

The directive also looks at possible exemptions that should exist within the categories.

This directive is currently being reviewed, and there’s plenty of lobbying going on to add some further exemptions and variations. One proposal is to allow the UK to apply a differential rate of duty on draught real ale and cider to help encourage a shift in consumption back to pubs.
Also, there are attempts to allow the UK to raise the threshold for a lower rate of duty on beer from 2.8% to 3.5% ABV to encompass a wider variety of beers and real ales.

Small Producer Relief

As part of the Excise Duty Directive consultations just mentioned, there are concerns that the EU may stop the current duty exemption for small cider producers in the UK who make less than 70 hectolitres a year. Campaigners and politicians are also keen to see the introduction of a sliding scale of duty to support medium-sized cider producers – similar to the existing Small Breweries’ Relief for beer producers.

Currently, for beer producers, the Directive allows for member nations to allow up to a 50% reduction in duty below the standard national rate.

This allows the UK government to offer their current Duty Relief scheme for Independent small breweries. From June 2002 this applied to all breweries whose annual production was 30,000 hectolitres or less, and two years later this was increased to 60,000 hectolitres, from June 2004.

Protected Origins

Geographical food names are protected under EU law, as part of the Union’s main aims of supporting farmers and producers in producing high value, traditional foods and drinks.

So whether it’s Parma Ham or Czech Beer, their names and origins are protected. European wine denominations, and their national couterparts, also get added protection under these rules.

When the EU is involved in brokering trade deals with countries and trading blocs around the world, these protected designations are important features.

One of the main beneficiaries in the UK is Scotch whisky, where EU designations protect the name and ensure that Scotch only comes from Scotland.

The Scotch Whisky Association says: “It is an advantage to have the “Scotch whisky” geographical indication protected at EU level, enforced across the single market, and incorporated into EU trade deals.”

If the UK was to leave the EU, then those designations would almost certainly have to be rewritten into UK law. However, some products from outside the EU are protected – Tequila has protection, for example. Nonetheless, it’s likely that the UK would not have the same level of influence in how the designations are drafted, if we were not inside the Union.

Wine labelling:

Current EU rules mean that allergens, such as sulphites in wine, need to be mentioned on labels. However, drinks are currently exempt from labelling rules that insist on detailing all the other ingredients contained within drinks products. It seem that the EU members find it just too hard a decision to enumerate exactly what should be included in the list of requirements.

The EU’s Alcohol Strategy – which looks at a whole range of health and social measures around alcohol – lapsed in 2013, and remains under discussion.

The UK House of Lords recommended last year that EU rules on food labelling should be amended to include alcoholic drinks. They said these labels should include, as a minimum, the strength, the calorie content, guidelines on safe drinking levels, and a warning about the dangers of drinking when pregnant. Voluntary commitments, says the House of Lords, are not enough.

Advertising & Marketing of alcohol:

The EU approach is that the main responsibility for regulating alcohol advertising lies in the hands of member states.

They say: “Action taken in Brussels is designed to complement rather than harmonise national rules in the field.”

Current EU regulations do not impose any ban on alcohol advertising unless it is explicitly targeted at minors.

Production standards

EU rules determine certain production standards for different types of drink. For example, the EU Spirit Drink regulations define what constitutes the allowable characteristics and production methods for categories like gin. At the moment, that means that gin has to be made from a starting point of neutral alcohol distilled to a minimum of 96% ABV. As members of the EU, any changes to this wanted by UK producers would need to be negotiated at EU level.

In the  early days of the EU, spirits definitions were not harmonised, and each Member State had their own rules, but over time it was seen as advantageous to have more definition, and ensure basic quality standards for spirit across the member markets.

The EU also makes allowances for some production practices in countries outside the EU that don’t conform exactly to normal EU regulations, when those wines are imported into the EU. So wines from Australia and the US are in some cases allowed to be made in slightly different ways, and still sold in the EU.

Language

English is an official language of the EU, and as such meetings and documents all need to be produced at EU level in English, alongside the other official languages.

There are rules on labelling at an EU level, and mandatory “horizontal” labelling information is required to appear in a language “easily understood by consumers”.  However, for wine, the “vertical” EU rules only require wine labels to be in one or more languages from among the official EU languages, which may include English.  So it can get very confusing

If we are no longer a member of the EU, then would English continue as an official EU language? That might cause problems for selling into some EU markets, but at the moment it’s one of those nebulous areas where no one’s quite sure.