Tuesday, 7 February 2012

Minimum Pricing of Alcohol in Scotland 2: The SWA

A couple of posts ago, I tried to explain why minimum pricing is probably illegal. This post is less technical, but more business related. It concerns the press release made by the Scotch Whisky Association as to its stance on minimum pricing.
They say it’s illegal too, so I should probably be agreeing with them. And to their legal basis, I do. But I can’t help but think that their press release is not a particularly good strategy for them. I’ll deal with it as ‘gobbets’ to explain why.
Minimum pricing ineffective and illegal screamed the headline. My issue with ineffective is that the SWA’s evidence is as shaky as the Scottish governments. That headline deserves more than the paltry Average alcohol prices are higher in Scotland than in England, yet consumption is greater in Scotland which raises doubts over the Government’s claim that higher prices will address alcohol misuse in Scotland hidden in the endnotes. The difference is pennies, and, as we are well aware, issues of culture and history and distribution of costs and healthcare all play a role.
My problem with illegal is maybe less strong. I explained why minimum pricing might be caught by free movement laws, and would therefore be illegal. But I dislike when people cry illegal as a Finish-Him move that ends discussion (so as to avoid discussing merits) and to try and label the transgressor as a dirty-no-gooder. Maybe the SWA weren’t doing that.
What I can’t understand  is why the SWA would publish the press release at all. Claims that Scotch Whisky as a ‘premium product’ has nothing to fear from minimum pricing are misplaced. Within Scotland less affluent consumers who buy own-label Scotch Whisky will be hit, while the knock-on impact of copycat trade barriers overseas could lead to enormous damage in the industry’s exports markets… A legal alternative would be to work with the UK Government on a UK basis to remove tax discrimination between different drinks and to introduce a ‘floor price’ for alcohol based on the revised duty rates and VAT.
First, we get a glimpse into why the SWA are concerned – Scotch could be affected. They are not in the slightest concerned with the strict observance of EU treaties for their own sake. Second, they are right that some Scottish customers would be affected, but it is true that branded Whiskies soar above (the assumed) minimum price requirements. I also am unconvinced that exported whiskies wouldn’t also survive minimum price requirements abroad. Further, given the ‘premium’ reputation afforded to Scotch, and the strict controls on what can be marketed as Scotch, whisky producers have some amount of safeguards. The tax issue hits towards the nub of the SWA’s concerns - Scotch Whisky is taxed 250% higher than cider, 37% higher than beer and 30% higher than wine. But this is partly why minimum pricing would affect them less! That said, I can understand that a more coherent structure towards alcohol pricing may be ‘fairer’. But then this leads to a rather funny final point – the SWA reckons higher pricing is ineffective, but wants to raise the floor price through tax. Why? Wouldn’t that be ineffective too? (It might also be illegal, under EU directives on alcohol duties, but I could be wrong).
I still don’t understand why the SWA has gone public. It is easy to pay lip service to the objective of a more healthy, positive and responsible attitude to alcohol and then slip into self-preservation. Given that other alcohol producers have backed the proposals, it’s not great PR to oppose them publicly. Maybe a more pragmatic approach would be to welcome the attempted change in culture, survive the implemented scheme (as I reckon whisky producers would) and tell on the Scottish government to the EU Commission, and wait. Or, get right on board with the proposals. If cheap booze kills (which it might), it takes a devil’s advocate to defend it.

No comments:

Post a Comment