The Scottish Government’s proposed minimum price of 45 p 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 pr oposed 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’, address ing 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 , accordi ng 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.”
Note to Editors: 1. 45 p a unit would result in a minimum price of £12.60 for a 70cl bottle of Scotch Whisky (at 40% vol.) . The current average price for Scotch Whisky in Scotland is £10.85.
2. Analysis of a wide range of international price elasticity studies suggest s the average price elasticity of demand for spirit drinks is -0.80 . This means that for every 10% rise in price, there will be an 8% reduction in sales.
3. Alcohol served as Scotch Whisky is already taxed some 250% higher than the same amount of alcohol served as cider, 37% higher than beer, and 30% higher than for wine. The excise duty on Scotch Whisky has been raised nearly 22% since 2008.
4. A ban on sales below tax introduces a ‘floor price’ for alcohol that is both simple and enforceable, overcoming the legal issues around the Scottish Government scheme. Retailers would be required to pass on any increase in tax to the consumer.
5. The European Court of Justice has consistently ruled that minimum pricing schemes are likely to be illegal. Any exception would have to be proportionate, necessary to protect public heal th, and the least trade restrictive measure available. Given other less restrictive options exist – such as tax reform and a b an on sales below tax – the Scottish scheme is likely to breach EU law.
OVER £1 BILLION BOOST FROM DUTY REFORM FOR GOVERNMENT
Taxing all alcoholic drinks at the same rate by alcohol content addresses concerns over low pricing and could raise over £1 billion extra revenue a year for the Government, according to the Scotch whisky Association.
In its submission to the UK Government’s alcohol tax review, the Association is calling for reform of the duty system so that all dri nks are taxed on the same basis, according to alcohol content.
Independent analysis for the Association has shown that between £1bn and £2bn more tax revenue a year could be generated for the Government under such a system.
At present alcohol served as Scotch Whisky is taxed 250% more than the same amount of alcohol sold as cider, 37% more than for beer and 30% more than wine.
Combined with a ban on sales below tax to set a legal ‘floor price’ and ensure the duty is paid by consumers , the Association said reform could help boost the public finances and address politicians ’ concerns over low priced drinks, whilst also being consistent with EU tax rules.
Gavin Hewitt, SWA Chief Executive said: “The modern alcoholic drinks market is highly competitive , yet competition is distorted by a tax system based on the market of the 1920s. “Reform is long overdue and could bring a double benefit to Government; greater revenue and a rou te to tackle low priced drinks. Tax based on alcohol content is a fair and socially responsible way forward.”
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ALCOHOL COMMISSION RIGHT TO REJECT MINIMUM PRICING
Today’s rejection of minimum pricing by Scottish Labour’s Alcohol Commission has been welcomed by the Scotch whisky Association.
The Association said it supported moves towards a UK-wide ban on sales below tax , combined with excise duty reform so that all alcohol was taxed at the same rate, according to alcohol content. Scotch Whisky drinkers currently pay 250% more duty per uni t of alcohol than cider drinkers.
The duty on whisky is 37% greater than beer and 30% higher than wine. By progressively moving to an equitable system where all drinks are taxed at the same rate , the Government could generate more than £1 billion a year extra revenue according to independent analysis commissioned by the Association.
Gavin Hewitt, SWA Chief Executive, said: “ Excise duty reform is long overdue. It could bring significant extra revenue for Government . C ombined with a ban on sales below tax to set a legal ‘floor price’ for alcohol, duty reform could also address concerns at low priced drinks on a UK-wide basis.”
The Association welcomed the Scottish Labour p arty’s scepticism of a proposal to restrict alcohol sponsorship and advertising, saying such a move would damage local community groups, tourism, and important support for many cultural and sporting events.
A suggestion that alcoholic drinks should not be served at Scottish Government or Parliamentary functions was dismissed by the A ssociation, which said that Scotch Whisky should be showcased as a premium Scottish product at such events.
For further information :
Campbell Evans, Director of Government & Consumer Affairs T: 0131 222 9231 M: 07768 002262 David Williamson, Public Aff airs Manager T: 0131 222 9230 M: 07730 496151
Glenglassaugh Distillery, Portsoy. 26th August 2010.
FOR IMMEDIATE RELEASE.
· New “Spirit Drink” range revealed · Unique products offer insight into evolution of whisky
The Glenglassaugh Distillery Company today announces the release of a unique range of “Spirit Drink” products – an opportunity for malt whisky fans to sample the evolution of the spirit that will eventually become whisky.
The range – packaged in 200ml bottles and all at 50% abv – initially comprises four products under the Spirit Drink brand umbrella:
‘Clearac’ – brand new ‘new make’ spirit straight off the still ‘Blushes’ – the Glenglassaugh spirit aged for – 6 months in ex-wine casks, and ‘Fledgling XB’ – new spirit aged for – 12 months in Bourbon casks ‘Peated’ – brand new ‘new make’ spirit produced using peated malted barley
The distillery’s MD, Stuart Nickerson, said:
“The Spirit Drink range follows the successful one-off bottling of The Spirit Drink that Dare Not Speak Its Name, the world’s first release of a single mash and feedback from our consumers.”
“Malt drinkers told us that they wanted to try as many variants of our evolving spirit as possible; that they wanted affordable sampling packs and that different cask types were of great interest. The Spirit Drink range is the result.”
“We have other variants in the pipeline including spirit aged in quality sherry wood and spirit aged for longer time periods. The variation is interesting and the overall quality incredibly exciting. The prospects for Glenglassaugh when fully matured are exceptional.”
The range was launched with a party and sampling at Edinburgh’s Bramble Bar, rated one of the world’s top cocktail spots. Bramble Bar’s Mike Aikman said:
“At Bramble, we are always excited to use innovative new products in our cocktails, challenge people's perceptions of what can be done with these spirits and praising the versatility of the different expressions.”
The Spirit Drink range will be available from 26th August at good independent retailers; from the distillery shop and via Glenglassaugh’s international distributors. UK RRP is £13 per 200 ml bottle.
Plans are currently being made for a triple pack containing Clearac, Blushes and Fledgling XB to be available, within the next few weeks.
About Glenglassaugh
The Glenglassaugh Distillery is situated on the Banffshire coast in the North-East of Scotland, close to the small village of Portsoy. The distillery was built in 1875 by local businessmen to satisfy the growing global demand for Scotch Malt Whisky and the site was chosen due to its close proximity to a high quality water supply and easy access to the nearby barley fields.
After a visit in the late 1880s, the highly-regarded Victorian commentator Alfred Barnard described Glenglassaugh as “too well known to need any praise.”
More recently, spirit from Glenglassaugh was used primarily in blends such as Cutty Sark and The Famous Grouse. In 1986 the then owners mothballed Glenglassaugh as part of wider cutbacks in production and the distillery has remained silent thereafter. In 2008 The Scaent Group of Amsterdam purchased the distillery and have invested more than £1m to recommence operations and to reintroduce to discerning customers the distinctive and high quality attributes of The Glenglassaugh Single Malt Scotch Whisky. For more information, please visit www.glenglassaugh.com
Redevelopment
The refurbishment and reopening of the Glenglassaugh Distillery have been managed by Stuart Nickerson, a renowned whisky expert, who was the sole consultant during the acquisition. Nickerson has worked in the Scotch Whisky industry since 1981 with a significant part of his career being with William Grants, where he was Distilleries Director. Previously, he managed Highland Park Distillery, Glenrothes and Glenfiddich Distilleries in succession. He was appointed the new Managing Director of the Glenglassaugh Distillery Company in February 2008.
One of Stuart Nickerson’s first actions was the appointment of Graham Eunson as Distillery Manager, effective from 1st April 2008. Graham joined the Distillery from Glenmorangie where he was Manager of the world famous distillery for the last 12 years. Graham has also worked at Glendronach and Scapa distilleries.
Production at Glenglassaugh was restarted on 24th November 2008 by Rt Hon Alex Salmond, Scotland’s First Minister and the distillery’s MP. Distilling was thus commenced under the guidance of Stuart Nickerson and Graham Eunson, the new management team, who have now released a number of innovative new products.
For further information, please contact:
Ronnie Routledge, Glenglassaugh Distillery Co.
Telephone +44 (0) 1261 842367
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WHISKY INDUSTRY BACKS PLANS FOR ALCOHOL DUTY REVIEW
The Scotch whisky Association welcomed the Chancellor’s decision to freeze the excise duty on alcohol and to press ahead with a review of the system this autumn.
The current alcohol duty regime discriminates against Scotch Whisky, a major UK manufacturer and exporter. Scotch Whisky already carries 37% more duty than the same amount of alcohol served as beer , 19% more duty than wine and 224% more duty than cider, the Association said. The VAT rise in January 2011 will increase the discrimination faced .
The Scotch Whisky industry also welcomed the announcement that corporation tax would be cut over the next four years.
Gavin Hewitt, Chief Executive of the Scotch Whisky Association said:
“The Chancellor has made a sensible and welcome decision to freeze excise duty. He is also right to press on with an early review of the current excise duty system.
“We encourage the Government to look closely at taxing all drinks at the same rate according to alcohol content, coupled with a ban on below tax sales. We believe this route would help the Government address its concern over the pricing of alcohol, would secure greater social responsibility and would offer increased revenue.
“Today’s announcement on corporation tax will also help Scotch Whisky play its part in growing the UK’s manufacturing and export sector.”
