Cheap whisky 'will be killed off by new law'

Currently retailing for as little as 7, a bottle of whisky would cost more than 11 if a minimum price of 40p per unit was applied.

Whyte and Mackay, which makes budget whisky for supermarkets as well as its own brand, fears the own-brand products will be removed once minimum pricing is introduced, because consumers will decide it no longer represents good value for money.

The 160-year-old Glasgow company said that, if introduced, the policy would have a "big impact" on its business, which employs more than 500 people in Scotland.

The warning comes as ministers put the finishing touches to an alcohol bill, expected to be published in the next few weeks.

There is growing speculation that it may be watered down so that it includes only so-called "enabling powers". Under such an arrangement, the principle of minimum pricing would be enshrined in law, but the parliament would then have to reach a second agreement to put a minimum price into practice.

Ministers have long argued that the plans would not affect premium products, such as whisky, and instead target cut-price drinks such as cider, lager and alcopops, which would be increased in price.

But Scotland's whisky industry, which accounts for a fifth of the country's entire export market, has insisted the move will cause major damage to its business, and firms are now stepping up their campaign to persuade ministers to ditch their plans.

A spokesman for Whyte and Mackay said: "Contrary to what the government seems to think, there will be a strong and negative impact on the whisky industry. Own-label whisky (supermarket brands] will be particularly badly hit, and that will have a big impact on Whyte and Mackay and other Scotch producers who create quality own-label whisky."

He went on: "Minimum pricing will lead to the delisting of great, much-loved products which have nothing to do with this issue at all."

Retailers also said that supermarket brands would inevitably be taken off the shelves if minimum pricing came in.

One said: "The logic of the position is that if a value range of whiskies currently selling at 7 goes up to 11 or 12, which is around the same price as branded whiskies, then why would supermarkets sell their own brand?"

Retailers say whisky companies which make the supermarket brands would lose market share as a result.

Murdo Fraser, deputy leader of the Scottish Conservatives, said: "This completely undermines the argument that the SNP made from the outset, that whisky would not be affected by minimum pricing because it is a premium product. Whyte and Mackay is driving a coach and horses through the SNP case."

He added: "We agree there is a problem here, but what we need to do is have a targeted approach where we look at increasing the price of those drinks like the cheap lagers, ciders and alcopops which are causing the problem."

But a Scottish Government spokesman insisted almost all Scotch whiskies would be unaffected by the minimum price plans. Estimates show that only 1 per cent of malt whiskies would rise in price, because they already are priced above the proposed floor.

He went on: "Scotch whisky's success is built on its perception as a quality product. This image is undermined by the rock-bottom pricing of a minority of bottles by some retailers, which puts it in the same price category as industrial vodkas sold for less than 7, which we know are the drinks of choice for problem drinkers."

The spokesman also said that to blame minimum pricing for any job losses would be "a smokescreen", adding: "This is clearly demonstrated by the recent decision by Diageo to abandon production of Johnnie Walker in Kilmarnock."

The retailers and the whisky trade are likely to step up their efforts to persuade Scottish ministers to adopt other methods to reduce binge drinking, in the weeks before the bill is published.

However, sources close to the Scottish Government say that officials and ministers are determined to press ahead, despite the criticism.

"This is their smoking-ban moment," said one insider.

Jack Law, the chief executive of Alcohol Focus Scotland, and Bruce Ritson, of Scottish Health Action on Alcohol Problems, issued a joint statement last night supporting the measures.

They said: "Scotland's problems with alcohol are being driven by increased consumption, which is being fed by plummeting prices and aggressive promotion. A minimum price for a unit of alcohol as part of a wider package of measures will help us reduce alcohol consumption and harm."

But the government case received an embarrassing blow from the results of a survey on the Alcohol Focus Scotland website, which is asking people whether cheap drink is damaging health and society. After 6,600 hits, 95 per cent of respondents had said no.