Alcohol Strategy Introduces a Min. Unit Price of 40p

The government have published their long awaited Alcohol Strategy paper outlining how they intend to reduce the negative impact alcohol has on communities across the UK.

The paper doesn’t contain many real surprises, although now we have some more of the detail.

The headline grabbing policy is the proposed introduction of a minimum price per unit of alcohol or MUP as it is already being referred to.

Those opposed to the minimum unit price are already using the term ‘tax’ in reference to this policy, but it should be made very clear this is not a new tax, but rather a baseline sale price which all alcohol retailers will have to work to.

The MUP is certainly not a done deal and will not become law until new legislation is brought in to legitimise it; we can also expect to see a legal challenge to the policy from one of the big drinks companies. It is after all the manufacturers of alcohol who will lose out most from this new policy.

40p Minimum Unit Price (MUP)

On-Trade (bars, clubs, restaurants etc.) will not see any significant effect on pricing and if it does reduce pre-loading then it may actually have a positive impact.
Off-licences competing with the supermarkets, may be able to close the gap on price parity as the supermarkets will have to raise prices on their lowest priced items to meet the MUP.
Supermarkets themselves are not likely to be that happy as their advantage gained through bulk purchase will be eroded, however they may well end up consoling themselves on the greater margins they generate.
The Brewers and other drinks companies are the ones who will see no margin increase and potentially squeezed production. These are industries where the margins are actually very small and with increased taxation and ever growing cost of raw materials, they rely somewhat on the volume of production; that volume is what is being targeted.

However while the headlines talked mainly of the 40p minimum price per unit, there were a raft of other measures which the government outlined in this paper. Many I have discussed previously in this blog in the anticipation of their introduction, but below is a summary of the main points:

Minimum Unit Price (MUP) suggested at 40p per unit.
The banning of ‘multi-buy promotions’ for the off-trade; this would mean that the price of a case of 24 bottles could not be reduced below the price of 24 x price of each bottle sold individually. (more information to follow in future blogs)
Review and reinforce the legislation regarding irresponsible promotions in the on-trade. (more info to follow)
Review the exemption of wholesalers from the licensing regime and introduction fiscal marks to make detection of fraudulently sold or counterfeit alcohol, easier.
Deliver stronger enforcement regarding the advertising of alcohol to ensure it is done responsibly; specifically targeting advertising which would appeal to young people.
Introduce powers this year (September) to allow Local Authorities to apply Late Night Levies and Early Morning Restriction Orders locally. Read More >>
Pilot Sobriety Orders in 5 areas (Westminster, St Helens, Hull, Plymouth & Cardiff) Read More >>
Allow a new health related objective to be used as a reason for the introduction of Cumulative Impact Policies relating to the density of licensed premises in local areas. (more info to follow)
Force local authorities to publish much more data about premises licences, their conditions and any actions taken against them online. (more info to follow)
Make it easier for information regarding crime on or near licensed premises and NHS data of admissions related to alcohol, to be made available to the public.
Continue the work being undertaken with the industry in the ‘Responsibility Deal’ to drive schemes which encourage responsible drinking. Special mention has been made on the Best Bar None, Purple Flag, Business Improvement Districts and as demonstrating the positive work currently being undertaken. See below for more details
Seek ways to enforce the law with regard to selling alcohol to a person who is drunk and review ways to deal with the complication in relation to prosecution in these cases. (more info to follow)
Review the advice given to adults regarding the unit consumption and better ways of disclosing relevant information to make choices easier for consumers. Improve the dissemination of information on alcohol consumption given to young people.
Provide further financial backing for organisations working with those worst affected members of our community, especially those with alcohol addition issues.

So now all the cards have been laid on the table it’s a matter of starting the process of adopting those policies which can and should be implemented; in some areas we will still have to wait and see what exactly comes of the consultation which the government plans and the legislation they intend to introduce to support their plans. Many responsible retailers in the on-trade will find that they need not make any significant changes to comply with the relevant pieces of legislation; those on the fringes and those who market aggressively and use alcohol to drive their businesses, will need to review their business strategies somewhat.

I am actually a great believer in a co-ordinated approach to licensing benefitting good and responsible alcohol retailers from the top to bottom. As a lead assessor for Purple Flag, I have had the privilege to witness and assess some of the best run areas of the night-time economy. On every occasion the well regulated towns where businesses, police, licensing and town centre management work together are not only nicer, safer places for town centre users, they are busier and the businesses are flourishing.

Responsible alcohol retailing brings positive change for off-licence

Earlier this week I was talking to a client of ours from Ipswich who runs a number of off-licensed shops.

Ipswich has, like many town centres, some problems with street drinking and the police seem to be trying to put measures into place to reduce the impact of this problem. In order to do this, they are working with shops to get them to train staff better and change the type of alcohol they sell.

Our client was sceptical of losing the sales of higher strength beers and cider he sells, but in the spirit of co-operation he removed these from his shelf. The immediate impact was that, as he had feared, those clients who bought these products went somewhere else, rather than switching to lower % abv. alcohol products.

However it was not long before something else happened; he started to see an increase in the number of female customers with children using the shop. Steadily trade increased and even went beyond the point it was at prior to the removal of these high % abv products and his customer base grew. I would bet that the margins he makes on the products these new customers buy is also significantly greater!

We shouldn’t always fear change, certainly this government seems intent on having an impact on the problems they have identified relating to alcohol, but that should be seen as an opportunity for the majority of businesses.

Some of the proposed changes will make life more expensive and complicated for licence holders, but there has also been some easing of red tape, which must be welcomed.

I will be writing a number of blog entries over the next few weeks, exploring some of the proposed changes in more detail and we will, as usual, bring you the changes in legislation as they happen; with, as ever, our advice and guidance on how you might choose to adapt your business to meet your legal obligations.

Related Reports
Government Alcohol Strategy – legislation.gov.uk
40p Minimum Price per Unit – BBC

Date – 27th March 2012
Submitted by – Peter Mayhew is the Managing Director of Beyond the Blue Training & Consultancy.

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