Whisky industry attacks 'crazy' campaign for minimum prices

Published on Saturday 28 November 2009 12:22

THE Scotch Whisky Association has slammed as "crazy" its continued need to fight against minimum pricing for alcohol and a resulting slump in tax receipts in a period of chronic austerity for Britain.

Gavin Hewitt, chief executive of the SWA, which was boosted last week by Labour's refusal to back the SNP's flagship proposal for minimum pricing, said the last thing Britain needs amid a burgeoning public sector deficit was a big reduction in tax income.

Hewitt said: "Companies are finding it hard and tough. The economy is hard and tough.

"Why would you start shooting yourself in the foot in this particular way at this particular time. It's crazy."

The SWA had calculated that the introduction of minimum pricing on Scotch whisky would lead to a 30 million fall in off-trade retail sales in Scotland, triggering a 22m annual fall in UK excise duty receipts from the industry.

However, Hewitt said a financial memorandum accompanying last week's Alcohol Bill estimated the excise duty reduction could be as high as 76m if minimum pricing was allied to a discount ban.

"It therefore looks like we were being conservative on the possible effects and it proves we are not crying wolf," Hewitt said.

"The Scottish administration could lose up to 76m, giving it potentially all that less to spend on its own budget, which is a twist. It is a particularly crazy idea to reduce revenue at this time for the public finances."

The SWA's fresh broadside comes amid Britain struggling with 830 billion of cumulative net debt, equal to 60 per cent of GDP. The country borrowed 11.4bn in October alone, and 87bn so far in this financial year.

Hewitt said he did not believe the battle over minimum pricing was finished, despite Labour's intervention. The SWA chief said he believed the argument over minimum pricing would still be fought tooth-and-nail at committee stage for the Alcohol Bill.

"I believe that the medical profession and other lobbies (for a minimum price] will be working extremely hard in committee to try and reverse the MSPs' thinking. We are not getting carried away. Our campaign continues," he added.

The Scotch whisky industry also argues that France could become an issue if the SNP presses ahead with its policy on alcohol. France is the second-biggest market for Scotch whisky. Hewitt warns it has its own strong protectionist reasons for instituting a potential copycat ban on minimum pricing for Scotch.

Hewitt said: "I was across in France very recently and sources told me that there is strong anecdotal evidence Bordeaux wines and champagne are currently in a parlous state. Their sales are down by value by about 40 per cent and 25 per cent respectively.

"The French (who do not tax wine) might well try to favour their wine trade further in these circumstances at the expense of spirits, where Scotch is the biggest seller in France, and dress it up as a health measure."

The SWA has estimated that French minimum pricing would reduce whisky exports by 86m a year.