Who profits from Scotland’s minimum pricing?

When she announced the 50p per unit of alcohol as a minimum price in Scotland, Nicola Sturgeon, the Scottish health secretary issued guidance on the effect on retail prices if the legislation comes into force as planned next year.

The price of 4x440ml cans of Tesco strong cider will go up by £2.87 while 70cl of Tesco Value vodka will increase by £4.41.

Meanwhile, 4x440ml cans of Carlsberg Special Brew will rise by £1.13, as will a similar pack of Tennent’s Super Lager.

A bottle of Silver Rock Chardonnay will increase in price by £1.50. No premium branded wines and spirits will be affected as they are already priced above the minimum level.

What Ms Sturgeon did not address, however, was who would profit from the extra revenue per bottle.

The Scottish Nationalist Party government north of the Border has been very explicit not to label the increases as a tax or duty rise – there is doubt over whether Holyrood has the authority to levy such an impost.

So it is focusing attention on the planned increases as a health measure designed to reduce the burden on the NHS caused by binge drinking.

It also hopes that this tactic will push the plan under the wire of the EU’s competition laws. That means the extra revenue will not end up in the Scottish Exchequer.

In the guidance notes, Sturgeon’s office sought to sidestep the question of who will profit.

“It will be up to producers and retailers to negotiate the price of contracts between them,” it said. “The only direct effect of the legislation will be on what price is charged to the consumer, not what level of price is agreed earlier in the supply chain.”

That has brought howls of derision from brewers, importers and producers alike, none of whom wished to be identified for fear of upsetting their supermarket clients.

“Anyone who thinks the big retailers will give up even a penny of the increase to producers is mad,” said one. “It will all go to improving the supermarkets’ margins. They will still want to drive down the prices they pay us.”

Even more derision of Holyrood’s thinking stemmed from the Scottish Health Department’s assertion that “the introduction of minimum pricing puts small retailers on a more level playing field with the big supermarkets.

Currently the supermarkets are asking the public to subsidise drinkers with their deep discounting of alcohol, which has to be paid for elsewhere through higher prices on other goods,” it said.

“That is madness,” said a leading importer. “It is an admission that the supermarkets have been a prime cause of binge drinking through deep discounting and loss leaders, yet they are going to be rewarded through higher prices and wider margins at the till! Do they make donations to the SNP?”

Another said that he knew of at least one company examining the possibility of taking premises on the English side of the Border to supply Scots seeking to beat the minimum prices when they come into force next year. “After years of the Calais Run, it’s now going to be the Carlisle Run,” he said.

A fourth said: “How ironic. In the week when Tesco told its 5,000 top managers that they are only going to get 17% of their possible maximum bonuses because of poor results, the SNP is guaranteeing that soon their margins on alcohol will be very healthy. Pun intended,” he added.