Diageo to back below cost booze ban

Diageo is said to be ready to back banning the sale of alcohol below cost.

The Guinness and Smirnoff owner is understood to have told the Government that it wants to end the sale of alcohol below the cost of duty and VAT but does not back a minimum price per unit of alcohol.

The comments are understood to have been made in response to a consultation on the Government’s proposal to ban the sale of below cost price.

According to reports, Mark Baird, corporate social responsibility manager for Diageo says although it “does not believe there’s a relationship between price and alcohol harm”, therefore no need for minimum pricing, “there’s a view that some alcohol sold at very low prices is damaging, so we believe the coalition’s proposal to look at sales below cost is worthy of further consideration.”       

In a statement released today (31 August) Diageo also calls for a new approach to alcohol taxation to ensure that the “the more alcohol in the drink, the more tax it will pay.”

It wants a unit of alcohol taxed at the same rate whether it was beer, wine, cider or spirits, “meaning that stronger drinks, which contain more alcohol, will pay more tax”.

Diageo has also hit out at calls for a higher “problem drinks” tax on the ready-to-drink category.

See Diageo's global innovation director talk at The Annual, Marketing Week’s new conference on 29 September 2010 www.theannual.co.uk
See Diageo’s global innovation director talk at The Annual, Marketing Week’s new conference on 29 September 2010 www.theannual.co.uk

“Contrary to common misperceptions, RTDs are not the drink of choice of either binge drinkers or under-age drinkers, since the overwhelming drinks of choice for these groups are beer, lager, cider and wine,” it says in a statement. 

Diageo’s reported backing of the “duty and VAT” definition of below cost brings it in line with supermarkets Asda and Morrisons. It is not known where alcohol industry body The Portman Group, to which Diageo is a member, stands on below cost sale but it has firmly rejected calls for a minimum price per unit claiming that it unfairly punishes the majority of responsible drinkers.

The coalition Government has said that banning deep discounting of alcohol will help tackle misuse and curb binge drinking.

Meanwhile, in its own response to the consultation, Alcohol Concern has joined with the Alcohol Health Alliance to call for an overhaul of the duty system to tackle alcohol-related health problems.

Under their model, there would be no additional duty on ’lower’ beer and cider products under 3.7% ABV% but a 10% increase in duty on beers and ciders between 3.7 and 5.2% ABV.

In addition, cider would be charged at the same duty rate as beer. It is currently half the beer rate.

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