SWA - Scottish minimum price plan is illegal and ineffective - 2nd September, 2010

02.09.10 - The Scottish Government’s proposed minimum price of 45p a unit will do little to address alcohol harm in Scotland but will cause significant damage to Scotch Whisky at home and abroad, The Scotch Whisky Association (SWA) said today.

Scotch Whisky producers believe minimum pricing would breach EU and international trade rules. Copycat action in export markets – with trade barriers justified on spurious health grounds – would have a major negative impact on Scotch Whisky overseas, undermining the industry and its supply chain across Scotland at a time of economic uncertainty.

At 45p a unit, the cost of an averagely priced bottle of Scotch Whisky in Scotland will increase by 16% to £12.60, reducing the domestic market by nearly 13%. Value and own-label brands would be particularly impacted.

A Scottish Government commissioned model suggests the proposed price fails to meet the basic tests of EU law, with only a 4.3% fall in alcohol consumption predicted. A range of other measures could achieve a similar impact, without distorting competition or restricting trade. The SWA again called for political parties to unite around long overdue excise duty reform and a ban on alcohol sales below tax. This would set a legal and transparent ‘floor price’, addressing issues around the pricing of certain alcoholic drinks.

Gavin Hewitt, SWA Chief Executive, said:“The Scottish Government’s scheme fails to meet the basic tests of EU law and will do little to address alcohol misuse. This policy would, however, significantly damage Scotch Whisky at home and abroad.

“We need consensus on a legal alternative. Excise duty reform so that all drinks are taxed on the same basis, according to alcohol content, and a ban on sales below tax, is a fair and socially responsible way forward. It would also raise over £1bn extra revenue for the public finances.”