Wine to ‘lose least’ from Scottish booze pricing

Wine has the least to lose from the proposed Scottish minimum unit pricing legislation (MUP), research from Nielsen found, but spirits, beer and cider and own-label lines look set to be hit harder.

A new study by Nielsen based on retailers’ sales found that 69% of spirits in Scotland by volume are currently sold below the 50p per unit threshold, just ahead of beer (67%), and cider (51%), but only 3.4% of wine currently falls below the minimum price per unit.

“Wine is, by far, the least impacted and so has the most to gain from minimum pricing,” says Marika Praticó, senior client manager at Nielsen. “Overall, wine will need to raise prices by the least amount, thus it becomes more affordable relative to other alcohol.”

The research found the proportion of drinks sold under the threshold was even higher among the top fifty products in each category, with 76% of the most popular spirits, 74% of the most popular beers and 54% of leading ciders fell below the minimum unit what will be imposed by the Scottish Government. For wine, this figure was 12%.

Blended Scotch and vodka are likely to be the two drinks most affected, the research found, but Praticó argued that although the price of blended Scotch and vodka would need to rise 20% and 16.3% respectively to meet the proposed 50p minimum unit price, this wasn’t necessary bad news for the industry providing demand didn’t fall more than a 12.5% “tipping point”.

“As long as any potential decline in demand doesn’t exceed this the industry will benefit thanks to the higher price point. Should demand fall by more than 12.5%, that’s when their revenues will decline,” she said.

Nielsen added the move was likely to spell the death-knell of large price retailer promotions north of the border, adding that it was also likely to affect supermarkets’ cheaper own-label brands the most, as the price differential between more expensive brands and own-label narrowed.

“It’s a good time for people to ‘trade-up’ to the more expensive brands, which is likely to have a negative impact on supermarkets’ own-label offerings,” Praticó added.

Nielsen predicted strong sales in the run-up to legislation being introduced, as Scottish consumers started to stockpile.

“It could well mean a bumper Christmas for alcohol retailers,” she said.  

In October, the Court of Session rejected a challenge to minimum unit pricing brought by the Scottish Whisky Association, paving the way for the government to push forward with the policy that was given the go-ahead by MSPs in Holyrood in 2012.

The SWA has long opposed plans to impose minimum unit pricing on alcohol arguing that it would not reduce the number of hazardous drinkers in Scotland and was in breach of European law.

When the court ruling was announced on 21 October, the SWA’s then chairman, David Frost, said it continued to believe MUP was a restriction on trade and there are more effective ways of tackling alcohol misuse.

“We will study the details of the judgement and consult our members before deciding on next steps, including any possible appeal to the UK Supreme Court,” he said, adding. “We, of course, remain committed to working with all partners to address this problem so that the long-term trend of declining alcohol-related harm in Scotland continues.”