Spirits sector baulks at alcopops outrage

The drinks industry’s efforts to present a united front on the alcopops furore finally collapsed last week. Angry spirits companies are breaking ranks from their brewing brothers and calling for the Government to distinguish their own pre-mixed spirits from alcopops, which they feel have brought their own products into disrepute through irresponsible marketing.

Currently, both fall into the same broad tax band, which looks likely to rise in next month’s Budget to deter underage drinkers (MW June 5). The spirits manufacturers’ frustration spilled out because they see lucrative sources of revenue about to be severely penalised.

All these flavoured beverages come under the “made wine” tax band. This covers a miscellaneous range whose only common denominator is a maximum strength of 5.5 per cent alcohol by volume and which do not come under the categories of beer, spirits, cider or wine made from fresh grapes. The category was created in 1983 to encourage innovation.

Spirits manufacturers such as IDV, which makes Smirnoff Mule based on the premium vodka brand, and the Westbay-manufactured vodka martini cocktail mix V2, will be classed in this bracket, along with fermented fruit drinks such as Bass’s market-leading Hooper’s Hooch.

In Kenneth Clarke’s November Budget the made wine sector had to absorb a tax hike of more than 40 per cent, equivalent to 7p and 8p a bottle, to deter underage drinkers and bring the duty into line with beer. There are fears that Chancellor Gordon Brown will again react to public concerns and raise tax by up to 50p a bottle this time.

An Allied Domecq spokesman says: “The Government sees only the controversy in alcopops, which is predominantly driven by the brewers. We want it to understand the dynamics of the market and treat them [alcopops and pre-mixed spirits] differently.

“The Chancellor may react to the sensitivities surrounding alcopops and increase duty, pricing the pre-mixed spirits market out of existence.”

But Peter Lewis, director of trade body the Wine & Spirit Association, says any separation of the made wine category would be impossible.

“Our view is unequivocably that it does not matter what the derivation of the alcohol is,” says Lewis. “Even if the category was sub-divided, there are responsible manufacturers in each which would be hit.”

That is a view shared by Bass: “The issue is not about recipe-based sub-divisions within the sector,” says a spokesman.

“It is about manufacturers and retailers taking their responsibilities seriously when it comes to the marketing of alcoholic drinks, regardless of whether they are spirits, cider, flavoured beverages or beer.”

But one spirits lobbyist says: “There is a desire to see if there is any way to differentiate the made wine category. But the Treasury doesn’t like splitting hairs. If you have broad definitions you get more money from the tax increases.”

It will be too late to influence next month’s Budget. The target for much of the spirits industry’s lobbying is the Home Office committee, set up by Home Secretary Jack Straw, to scrutinise alcopops as part of a wider study of the problems of underage drinking.

Straw has asked George Howarth, the minister responsible for the licensing laws, to have urgent discussions with the drinks industry on self-regulation and more draconian measures such as an ad ban, restrictions on where the drinks can be sold, and even a ban on the drinks themselves.

Lionel Stanbrook, deputy director-general of the Advertising Association, says: “You would have to get a lawyer to decide what is an alcopop and what is not. It would be like the Dangerous Dogs Act, where judges had to decide whether a dog was a pitbull terrier or not.”

He argues that this is a marketing problem, not an advertising one, because alcopops are so rarely advertised anyway (only Hooper’s Hooch has received a small amount of TV coverage).

One observer says the discovery of alcopops was the drinks industry equivalent of finding the holy grail because they are the perfect “cross-over” beverage for young people with a sweet tooth, taking them into alcohol purchase.

But one brewing source accuses the spirits manufacturers of hypo-crisy. “Alcopops are also a cross-over opportunity into the spirits market,” he says.

The Portman Group, the industry-funded body which promotes sensible drinking, is pressing for a stronger self-regulatory code, including giving retailers the power to delist drinks which fall foul of it.

The initiative is widely supported, yet reaching agreement on protecting the public interest – specifically vulnerable youngsters – while giving people the right to choose, is not going to be easy. Especially when the drinks industry is starting to apportion blame and talk about the “good” and “bad” guys of alcohol marketing.

Spotlight, page 36