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The numbers simply don't stack up for this alcohol pricing non-policy

The Government has finally broken cover to some extent on alcohol pricing. The minimum unit price policy has already been canned, and rightfully so (see our earlier post on this). Now retailers will be banned (beginning 6th April) from selling alcoholic drinks "below cost price".

What does "below cost price" mean in theory? The Government's definition is excise duty plus VAT. The Telegraph reported this to mean £2.41 for a bottle of wine at 12.5% ABV.

A very rough and ready analysis (as rough and ready as the policy apparently) suggests the move will affect approximately zero per cent of our wine list. Of the supermarkets, the lowest price online at Asda is £4; Morrison's much-press released new online wine cellar has some bottles approaching the floor price but they're under a slightly cheaper duty regime. Aldi's whites begin at £2.99. Excluding sub-5.5% drinks like Buck's Fizz and light Lambrusco, even Tesco is unaffected. I gave up checking Sainsbury's because their browsing page is abysmal. Unsurprisingly, Majestic eschews the really low-end stuff and begins at £4.99 and I didn't bother to look at M&S and Waitrose for obvious reasons.

All in all, taking on the whole category beyond wines, reports are that this policy will affect in the region of one per cent of alcoholic drinks sold in this country. Yet officials are estimating annual savings of £5.3 million to the NHS, £3.6 million for the police and prisons, and £500,000 in reduced absenteeism at work.

That last one seems very low, so let's have a closer look at it.

Take the average salary of £26,000 and divide it by 260 (weekdays in a year) to give you a neat £100. If an employee finds a bottle of wine for cheaper than £2.41 (which if they do they're a sleuthing genius and should get a pay rise), gets merry and phones in 'sick' the next day, you have lost £100 worth of worker. Perhaps they're in a sales generating role, so let's for the sake of argument and easy numbers say they're worth an annualised £500 per day.

My higher and lower reckonings are that 1,000 to 5,000 staff across the country each year are not going to pull a fast one after a bender on cheap booze. Out of a working population of 33 million.

I'll leave you to do the sums, but my guess is the healthcare and crime figures are a wee bit optimistic too.

Comment 1

Ian Chaplin on

I doubt that many of the nation’s alcohol issues are wine based anyway. Personally, I’d be looking at 24 hour corner shops selling half bottles of generic vodka at £5.

That issue is less one of price and more one of availability, maybe the last Government should have been a bit more thoughtful before they changed the licensing laws.

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