Announcements by the UK’s two biggest supermarkets on measures to reduce alcohol abuse and under-age drinking have been cautiously welcomed by the industry.
Tesco chief executive Terry Leahy has ‘personally told the Prime Minister’ that the supermarket would work with government to tackle the problem.
And he is followed closely by Asda boss Andy Bond, who announced he is ‘already talking to the government’.
Asda says on Monday it will unveil a new raft of measures to tackle under-age drinking.
The measures can be ‘easily adopted’ and ‘will go a long way towards tackling the issue without the need for further legislation or delay’, Bond said.
All supermarkets have been criticised for selling alcohol below cost price – that is at a loss. In some cases lager can be bought for less than the price of a bottle of water.
Tesco and Asda in particular sell millions of pounds worth of beer, wines and spirits as loss-leaders. A government Competition Commission report published in August last year found that during the 2006 football World Cup Tesco sold £15.1m of beer at below cost price, Asda £12.9m and Sainsburys £5.3m. Wine and spirits below-cost sales were a fraction of that for all supermarkets.
Dan Jago, category director for beer, wines and spirits at Tesco, told decanter.com the announcement was not ‘product specific’.
‘Wine will be included as part of the challenge,’ he said. ‘This is not a case of us setting out our policy on pricing. We are trying to step up and take the lead on the whole issue.’
He added he hoped other retailers ‘would support the initiative.’
The British Medical Association – which has been strongly critical of the drinks trade, calling in a report published today for higher taxes on alcoholic drinks, and an end to ‘irresponsible’ promotional activities such as happy hours and two-for-one offers – was positive about Tesco’s move.
Professor Ian Gilmore, president of the Royal College of Physicians and chair of the UK Alcohol Health Alliance, said, ‘I welcome the change in position from Tesco and that they now acknowledge that price is an important driver in consumption of alcohol and alcohol-related harm.’
Tesco makes clear that a major part of the problem is competition law, which makes it illegal for retailers to have any discussion between themselves on price.
Tesco legal director Lucy Neville-Rolfe said, ‘We need to better understand the impact of price…To move forward all shops that sell alcohol need to act together, and this is where we are being held back by the law.’
She said government had to take the lead on this – and that all retailers of alcohol would have to be involved, ‘otherwise those looking for cheap alcohol’ would simply go elsewhere.
Many in the industry have welcomed the move – the Wine and Spirit Trade Association said ’it makes sense to at least have a discussion about these issues’.
Labour MP John Grogan, chairman of the All-Party Parliamentary Beer Group, told decanter.com, ‘This is the first time a supermarket boss has spoken in these terms. Tesco could have gone further and said they were stopping the practice of selling below cost as of tomorrow.
‘And it would have been a bigger announcement if Leahy had said it himself rather than speaking through his press office. But still it shouldn’t be dismissed.’
Association of Licensed Multiple Retailers chief Nick Bish said the same: ‘Tesco has finally woken up and realised that it is partly to blame for the nation’s collective hangover. There is nothing to stop Tesco from unilaterally taking action to ban below-cost selling in its outlets.’
Written by Adam Lechmere