Spin the Bottle: what are the government's choices for a new alcohol policy?

“We can’t go on like this. We have to tackle the scourge of violence caused by binge drinking. And we have to do it now.”

Those were the words of David Cameron introducing the government’s alcohol Strategy in March last year - the same document that went on to claim minimum unit pricing (MUP) would prevent at least 50,000 crimes and 9,000 alcohol-related deaths a year. Just over a year on, the policy lies in tatters. A consultation last November, supposedly not on the principle, but on the level of minimum pricing to be imposed (with a 45p per unit suggestion), was followed by a spectacular retreat in March, with Cameron asked, memorably, “was there anything [you] could organise in a brewery?” by opposition leader Ed Miliband. So with MUP dead in the water, what will the government do instead?

Before the Alcohol Strategy, the coalition’s flagship policy on alcohol was a proposed ban on the sale of booze below cost price. Defined as duty + VAT, it was part of the Police Reform and Social Responsibility Bill, to be introduced back as December 2010. Having seemingly been kicked into the long grass, a rebirth of what drinks giant Diageo describes as “the least distortive measure” available to the government could now be on the cards.

Still twitching?

But massive question marks remain over its ability to satisfy the Health lobby and win back credibility for the government. While there are similarities between MUP and below-cost selling in setting a price floor, the impact would be significantly less. Minimum pricing was forecast to have an impact on 52% of alcohol prices in the off-trade, with over 70% of vodka, over 60% of whisky and nearly 40% of wine prices expected to rise. Against that, research by Newcastle University claimed last year that fewer than 2% of promotions would be covered by the ban on sales below cost price.

“Everyone thinks minimum pricing has twitched its last twitch,” says an executive at one leading drinks producer. “But anything else they try and do on price could end up looking very weak by comparison.”

Any attempt to ramp up the impact of a below-price ban by adding a third factor to the ‘cost’ equation alongside VAT and duty would have suppliers up in arms, while the option of forcing companies to reveal their invoices, which has been toyed with in the past, opens a major can of worms on competition grounds.

Another potential weapon - and one wrapped up in the same consultation as MUP - is a proposed ban on multibuy deals, but it has proved even more unpopular with MPs and has many of the same arguments against. Parliament’s health committee last year claimed the move would leave the government open to “ridicule”, suggesting retailers were bound to find “innovative and newsworthy work-arounds”.

Evidence from Scotland, where a ban on multibuys came into force in 2011, also casts doubt on the teeth of such a policy, with a report six months on from NHS Scotland finding it had seen only a “modest decline” in alcohol sales since, which could have been caused by unconnected trends. And if it did work, a ban on multibuys would carry many of the same inflationary impacts on prices as MUP. Stephen Lewis, chief executive of Majestic Wine, warned last month that the move could make wine drinking a preserve of the well-off. “I’d be amazed if they went ahead with the ban on multibuys. If MUP had to go, then the multibuy ban must be dead in the water too,” says one drinks source.

So could it turn to voluntary deals? On paper, at least, the government has already won massive commitments from retailers and suppliers, including a pledge under the Responsibility Deal, signed in 2012 by the vast majority of the big players, to remove a billion units from shelves by December 2015.

“Everyone thinks minimum pricing has twitched its last twitch. But anything else they try and do on price could end up looking very weak by comparison”

This month is a crucial milestone, with the results of the first year’s worth of data from drinks companies and retailers being compiled by CGA/Nielsen. However, ministers are reportedly concerned about the low uptake of the pledge compared with others under the deal, with the producers of certain spirits such as whisky and gin claiming their hands are tied because of category minimum strength specifications. A report to the DH describes the barrier as a “high-profile gap in the achievement of the unit reduction pledge” and urges the industry to look for technical breakthroughs on alcohol, in the same way some sectors have achieved breakthroughs with salt reduction.

In other areas, however, the market for reduced-strength products is booming and not just at the big retailers. Last month Bargain Booze reported a 28% like-for-like rise in sales of low-alcohol products during the first quarter of 2013, with over 3% of the company’s total beer and cider sales now low or no-alcohol.

“This sub-category represents a good commercial opportunity,” says senior beer and cider buyer Matt Cain. Marketing for reduced strength booze is also going to get easier, with The Portman Group finalising changes to its code that for the first time will allow companies to actively market reduced-alcohol products in stores - something, perversely, previously barred.

Return to segregation

Despite its flaws, the Responsibility Deal is still seen by many as the best way to achieve big wins for the government on alcohol. The Grocer understands ministers are in the early stages of arranging talks with retailers and suppliers that could lead to huge changes in the way alcohol is marketed in stores, including the potential to adopt Scottish-syle restrictions allowing only dedicated alcohol areas.

Sources suggest some retailers would now be willing to make the move, claiming figures in Scotland since the 2009 move came in showed a temporary blip, but not a “huge hit” on sales. “The government and the industry now have a timely opportunity to take the Responsibility Deal to its next stage,” says Jeremy Beadles, corporate relations director at Heineken UK. “We’ve already removed the high-strength ciders, White Lightning and Strongbow Black from our portfolio. That was a proactive decision to exit the high-strength low-cost cider category often associated with alcohol misuse.”

The DH is also working with the DfE on plans that will see drinks suppliers and retailers provide millions for a new Alcohol Education and Prevention Pledge to run in both primary and secondary schools in the UK. Sources admit there is nervousness at the project, with the government desperate to ensure the industry is not seen to be guiding its health education policy, but at the same time equally desperate for the cash to fund it.

Drinks companies involved say the aim is for producers to be “completely blind” to the actual projects going on in schools.

“The pledge is primarily about industry committing funding,” says a DH report, which calls for an independent framework to lead the project, and for the industry to commit enough funding to run the education programme for “several years”.

Yet it doesn’t take a giant leap of imagination to envisage the negative headlines that could be sparked by such a programme, and the Responsibility Deal - or the ‘irresponsibility deal’ as it was branded in a report by the Royal College of Physicians (RCP) last month - will always struggle to win over the health lobby, many of whose members walked out at the very start.

“I don’t have a problem with the alcohol industry,” says Sir Ian Gilmore, former RCP president, chair of the powerful Alcohol Health Alliance UK, and the figure widely regarded as its most influential campaigner on alcohol. “What I do have a major problem with is the government seeking advice from the industry about which they have a clear conflict of interest.”

Ipswich alternative

Last month came news of results from a project in Suffolk that some believe could be a heaven-sent alternative. The Reducing the Strength campaign in Ipswich, spearheaded by NHS Suffolk, East of England Co-op and Suffolk Police, claimed to have helped slash street drinking in the East Anglian town by nearly 50% in just six months, aided by a voluntary ban by participating supermarkets on lagers and ciders with an alcohol volume of 6.5% or more.

Some people thought this could form the basis of a similar nationwide voluntary clampdown. They may have to think again. The Grocer has learned the figures behind the report, and the support it claimed to have from the industry, are not as they seemed. Asked to provide the full evidence of the impact of the scheme, the police admitted there was “no report to see” and that the only figures available were included in a press release.

The release in question also got major facts wrong, not least the claim to have been backed by a raft of major supermarkets in Ipswich, including Sainsbury’s. In fact Sainsbury’s was one of at least a third of local retailers that refused to take part in the scheme, amid major fears that it breaches competition rules and sets a dangerous precedent for interference in the free market.

“Sainsbury’s declined to be a part of the initiative on the basis of lack of evidence that our store was a contributor to any street drinking problem,” a spokesman explains, “not least because our store only stocked one affected line.”

Slippery slope

Another supermarket chain is also understood to have sought legal advice and been told “they should not touch this sort of scheme with a bargepole because of the potential competition issues”, adds a senior drinks industry figure. And suppliers also regard Ipswich as a “slippery slope”.

“What happens next?” she questions. “Do the NHS and the police start saying shops shouldn’t be selling whisky or vodka?”

A government affairs boss at one major drinks company agrees. “How on earth can you do this sort of thing legally?” she says. “I think the OFT must be wincing at the Ipswich scheme and I can’t see how it could be rolled out more widely without it intervening.”

However, the model does have powerful backers, not least Tesco, which has been a prominent backer of the government’s alcohol strategy, including minimum pricing. “Licensing conditions are set at a local level, and we always comply with them,” says Tesco. “In Ipswich we are complying with conditions from the local licensing board, which means we don’t offer the fullest range of alcohol products, and we are working closely with the police to monitor customer reaction to this idea.

“We take our responsibilities as a retailer of alcohol seriously, and we want to play our part in the fight against alcohol misuse. We have been engaging in constructive discussions with government on ways we can help, including minimum pricing.”

Another leading drinks industry figures agrees that the Ipswich scheme feels like “the basis of a much bigger voluntary partnership between government and the industry that would tackle the concerns the PM has”. “The fact it has provided evidence that it works I can see the government jumping on, and localism is massive for them.”

Community Alcohol Partnerships

Tesco is already involved in 31 so-called Community Alcohol Partnerships, which have sprung up across the UK, with the retailer working with local traders to tackle binge drinking among the young. The government has also introduced changes at a local level. Coinciding with the launch of elected Police and Crime Commissioners, local councils were given powers in November last year to charge a Late Night Levy on licensed premises opening after midnight, or enforce Early Morning Restriction Orders (EMROs) to restrict the sale of alcohol between midnight and 6am.

Meanwhile ministers are planning to ratchet up powers under the Mandatory Code for Alcohol to target promotions in pubs and clubs and give local licensing authorities greater powers to refuse licences based on local alcohol-related health harms. Such local powers have already been used in sweeping measures introduced in Scotland - policies some now fear could be heading south. “There has been a very clear shift in government policy,” says one retail leader. “The fear is they have turned away from pricing and are looking at controlling access. Everybody has been so focused on the threat of minimum pricing, we’ve let this one creep up on us and the impact could be felt by thousands of stores all over the country.”

The fears are shared by Brigid Simmonds, chief executive of the British Beer and Pub Association, who says the last thing pubs and brewers need is heavy-handed intervention at local level. “Local authorities already have perfectly good powers, they just don’t use them,” she claims. “The big stick is not the answer.”

No action necessary

Despite Cameron’s portrait of a crisis on our streets and amid the recent football violence, some industry experts wonder whether or not there is a need for a new strategy at all? While it might not be politically palatable, many argue the government should avoid introducing any big new measures, with the latest figures in March showing UK consumption had fallen 16% since 2004, with per capita consumption below eight litres per head for the first time since 1998.

The figures are even causing some who publicly came out in support of MUP to change their stance. “The fact is that alcohol consumption has profoundly plummeted. It’s gone off a cliff and I fail to understand why they need to do it,” says a senior figure at one supplier, previously counted on as a supporter by the government.

There will be no such climbdown from the health lobby. “Consumption is falling but the fall is very, very minor compared with the huge rises we have seen before,” says Sir Ian Gilmore. “There is also evidence that the impact of the downturn may have reduced overall levels, but led to more harmful drinking among others,” he adds. “While there is no silver bullet, minimum pricing is the most targeted measure as it would have the biggest impact among the most vulnerable who are proven to gravitate towards the cheapest drinks.”

He has written to the PM telling him it is “not too late” to stand firm, but he warns: “If MUP isn’t going to happen immediately, it’s likely to come in Scotland, in Northern Ireland, and Labour has committed to it here. If Westminster has to be dragged kicking and screaming with the rest of them, so be it.”