Last Orders for Cheap Drink in Scotland?

The Scottish Parliament has this week voted in favour of the Alcohol (Minimum Pricing) Bill, which thus passes Stage 1 of the Scottish Parliamentary process. The plan to deal with Scotland’s drink problem by minimum pricing for alcohol is therefore a step closer.

If finally enacted, the Bill will ensure minimum alcohol pricing which will affect pricing and marketing plans for onsite providers (such as pubs, hotels and restaurants) and retailers such as supermarkets and corner shops.

This would have an impact on retailers (including supermarkets), wholesalers, producers and the food and drink / leisure industry at large. Longer term health benefits may become apparent and in the short term, retailers and the drinks industry will watch carefully to consider their revenues and market approaches.

The Bill is now subject to scrutiny under Stage 2 (detailed consideration by committee) with the prospect of Stage 3 (detailed scrutiny by Parliament) before a Parliamentary debate on passing the Bill. The Scottish Government has said that it will announce the minimum prices before MSPs cast their final vote. The price will be based on three factors, namely the strength, volume and a price per unit of alcohol.

Minimum pricing for alcohol was a high profile, and ultimately unsuccessful, policy of the minority SNP Government in Scotland. In September 2010, it announced that it wanted the minimum price to be 45 pence per unit. The SNP was returned in a majority government in May last year and soon brought back the proposals. Since then, the Conservatives and Lib Dems have changed their minds and decided to support the Scottish Government policy (echoing the UK Coalition Government’s stated approach for minimum alcohol pricing to be introduced in England and Wales).

Support in the Scottish Parliament for the Bill has been has been enhanced by the SNP confirming it will support an amendment to be proposed by the Scottish Conservatives during Stage 2, namely that there will be a “sunset clause.” The effect of this is that the Scottish parliament will be able to review the effectiveness of the policy after five years, with the prospect of rescinding what would by then be law if it is found not to be workable or sufficiently beneficial.

Supporting and explanatory documentation to the Bill states that it is estimated that there will be higher revenues to the alcohol industry as a whole, but it acknowledged that where that increased revenue might be found (whether it would benefit retailers, wholesalers or producers or indeed all of them) was beyond the remit of the modelling that was undertaken on order to produce the note.

Cabinet Secretary for Health & Wellbeing, Nicola Sturgeon, said, “We have introduced a ban on quantity discounts and promotions in off-sales have been restricted, but already we have seen that without minimum pricing these attempts to take action on Scotland's alcohol problem are being undermined. By setting a minimum price for a unit of alcohol, we can raise the price of the cheap supermarket white ciders, lager and value spirits sought out by problem drinkers.”

The Scottish government has already unveiled plans to introduce a business rates supplement on larger retailers selling alcohol and tobacco, which they said would generate about £95m over the next three years. The retail levy recently passed its final test when a motion to annul it was defeated in the Scottish Parliament’s Local Government & Regeneration Committee. Applying to stores of £300,000 Rateable Value or more which sell alcohol and tobacco.

The impact on health and industry will become apparent, with consequences on the development of future supermarkets and retailer facilities (size and location); on the production and supply levels for producers and even the marketing strategies and financial modelling within the hotel and leisure industry.