Thursday 2 September 2010

Left hand, meet right hand

The drinks trade certainly seem to be putting out conflicting messages about alcohol taxation at the moment. On the one hand, we have the British Beer & Pub Association saying that the tax system should be set to favour beer, which is the weakest mainstream alcoholic drink, the mainstay of the pub trade, and overwhelmingly home-produced. On the other hand, we have Diageo saying that the tax system should be rebalanced so that all alcoholic drinks are taxed purely on their alcohol content, which would result in a reduction of duty on spirits in comparison with that on beer and wine. Of course, it’s all special pleading, and the anti-drink lobby will no doubt find it amusing that the industry are unable to come out with a consistent message on alcohol taxation.

On balance, I would say that the BBPA are more right than Diageo. The current relative levels of duty do at least serve to roughly balance the selling prices of the different forms of alcohol, and compensate for the fact that spirits, at least at the lower end of the market, are cheaper to make than beer or wine. Also, while it is invidious to claim that one form of alcohol is “better” than another, it is less like hard work to abuse spirits and therefore there is a case for the tax system sending a message that they need to be treated with a certain amount of respect. Tim Martin of Wetherspoon’s isn’t too impressed by Diageo’s stance either.

The Wine & Spirit Trade Association are surely quite right to point out here that:

“It is not possible to single out particular types of alcohol which are consumed by problem drinkers for targeted tax measures. Problem drinkers have access to, and consume the same products as moderate drinkers – it is their drinking patterns which make their consumption harmful.”
Trying to discriminate between different categories of alcoholic drinks on the grounds that some are disproportionately consumed by problem drinkers is a policy doomed to failure, as these drinkers will just move on to something else. While wine is often perceived as the drink least tainted by alcohol abuse, it is worth remembering that cheap red wine was the staple drink of the archetypal French alcoholic of a generation ago.


  1. You wouldn't really expect Diageo & BBPA to agree, would you? Diageo have a very narrow self-interest field, while at least the BBPA is looking at the broader picture.

  2. wine is the least tainted? I rarely see kids on the street, or in the bus stop, drinking beer. Buckfast yes, vodka and some random soft drink yes, beer never.

  3. Beer, in the broad sense, is tainted in the UK by:

    (a) "lager louts", football terrace violence and the image of Stella as "wifebeater", and
    (b) tramps and down-and-outs drinking Special Brew and Tennent's Super

  4. > these drinkers will just move on to something else.

    I remember being fascinated by the alkies in the Market Square at University who had a fine eye for booze pricing, switching between Sainsbury's cider and VP sherry en masse when the price of either varied by a few pence. So, yes.

  5. Cartoon in Punch decades ago:
    a tramp runs over to his mate and says:
    "It's a great budget - there's nothing on meths!"

  6. Off topic, but looking into my crystal ball, I see PC's next piece being about a certain favourite subject of his...

  7. I would guess that alcoholics would take the approach of finding the lowest per unit cost of alcohol, drinking for the alcohol rather than the preference for a particular drink.

    The effect of price on demand elasticity would be different between those dependant and those not dependant on alcohol.

    Doubling the price of booze would reduce my drinking. As it already is at safe levels I am uncertain what health benefits would accrue.

    I doubt it would reduce the drinking of an alcoholic.

  8. Tyson wrote: "Off topic, but looking into my crystal ball, I see PC's next piece being about a certain favourite subject of his..."

    I trust you weren't disappointed, although with such a vague prediction you have a very high chance of being right.

  9. Whats Tyson's favourite subject
    or need I ask ?

    Frothy Twentyman

  10. True-as for all mystics, but I did actually see that one coming...

    It's not my blog. My favourite subject is actually cheese.


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