The Scotch whisky Association (SWA) today called on the Government to back a key UK industry in the forthcoming Budget. The industry’s submission to the Treasury highlights that Scotch Whisky:

• Faces discrimination in the excise duty system so that consumers pay up to 250% more tax for choosing Scotch Whisky than other drinks
• An anticipated 6.6% duty rise will adversely affect distillers who have already been hit by duty increases of over 20% since 2008, while delivering little added Government revenue
• Remains one of the UK’s top exports, accounting for almost 25% of all UK food & drink exports and earning £99 every second for the balance of trade
• Has faced a 100% increase in cereal prices and 30% increase in energy prices, impacting local producers, including many small businesses.

The SWA is calling for a freeze on spirits duty in next week’s Budget (23 March) as a first step to introducing a fairer and more responsible system of alcohol taxation.
Gavin Hewitt, SWA Chief Executive, said:
“Scotch Whisky can only be made in Scotland and makes a unique contribution to the economy, particularly in fragile urban and rural communities. A projected 6.6% tax rise on top of recent VAT and excise duty increases will further penalise both the industry and consumers.
“This is unfair to a key sector of British manufacturing, and for the millions of people who enjoy Scotch Whisky every year.
“The Government has consistently said it will do whatever it can to assist the industry at home and abroad.    We welcome this support and ask the Government to make good its promise in the home market, with a freeze on duty levels for Scotch Whisky in next week’s Budget.”

Note to Editors:
1. The current excise duty level per unit of alcohol for Scotch Whisky and spirit drinks is higher than for other drinks. This will become worse as a result of the Government’s current policy of a 2% above inflation excise duty escalator (which would deliver a 6.6% tax rise on current estimates) and additional VAT on that tax rise.
2.    In the UK, Scotch Whisky is taxed as much as 250% more than the same amount of alcohol sold as cider, 37% more than for beer and 30% more than wine.
3. Maintenance of the duty escalator would increase the excise duty on a unit of alcohol served as Scotch Whisky from 23.8p to 30.7p by 2014.    The following table shows how this policy would entrench the level of discrimination faced by Scotch Whisky in comparison to other drinks. The table highlights the difference in the cost of tax and VAT on each unit of alcohol served:

4.    The industry supports over 40,000 jobs across the UK and accounts for £3.1bn in exports.
5.    For further information please contact Campbell Evans (0131 222 9231 or 07768 002 262) or David Williamson (0131 222 9233 or 07730 496 151) at the SWA.

The UK Government’s proposal to ban alcohol sales below tax in England and Wales has been
welcomed by The Scotch whisky Association (SWA).
Scotch Whisky distillers have campaigned for over two years for such a measure to be
introduced as a legal way to set a floor price for alcoholic drinks. The SWA also called today
for the same floor price arrangements to be introduced in Scotland.
With a bottle of beer, wine or spi rits displaying the alcohol content and carrying a known tax
burden, enforcement of a ban on sales below excise duty and VAT is simple to operate and
transparent.
The SWA supports the proposed ban as part of a two stage approach to modernising the UK
al cohol duty regime. A floor price, where a unit of beer is taxed at 21p and of whisky at 29p,
highlights the differential taxation of alcoholic drinks and reinforces the need for a fairer
excise duty system, with all drinks taxed on the same basis according to alcohol content.
Gavin Hewitt, SWA Chief Executive, said:
“A ban on alcohol sales below the cost of excise duty and VAT is the right way forward. The
next stage should be reform of an outdated duty system so that tax discrimination between
drinks categories is removed and consumers are treated fairly whatever drink they prefer. The
Budget in March offers an early opportunity to begin to introduce a fairer balance in alcohol
taxation.”

- ENDS -

Note to Editors:

1. The SWA has consistently argued for the introduction of a ban on alcohol sales below tax,
establishing a legal ‘floor ’ price for alcohol (as distinct from the ‘minimum price’ scheme
envisaged by the Scottish Government which would have breached EU law).

2. Alcohol served as Scotch Whis ky is already taxed some 250% higher than the same amount of
alcohol served as cider, 37% higher than be er, and 30% higher than for wine.

3. With a ban on alcohol sales below tax, the floor price for a 70cl bottle of Scotch Whisky would
be £8.00. By 2014, under current tax policy set out by the UK Government, the floor price
would rise to £10.33.

4. For further information please contact Campbell Evans (020 7629 4384 and 07768 002 262) or
David Williamson (0131 222 9230 and 07730 496 151) at the SWA.

Today’s decisive vote to reject minimum pricing by the Scottish Parliament has been warmly
welcomed by Scotch whisky distillers.
T he Scotch Whisky Association (SWA) has consistently argued that minimum pricing would be
illegal and ineffective in addressing misuse, whilst significantly damaging one of Scotland’s key
industries.
The Association calls on all parties now to work together on alternative UK tax -based measure s
to address concerns over the pricing of certain drinks. T his can be achieved through early
reform of the excise duty system and the introduction of a UK-wide ban on alcohol sales below
tax.
Gavin Hewitt, SWA Chief Executive, said:
“The Scottish Parliament is to be congratulated. MSPs have looked carefully at the evidence
rather than listening to the rhetoric on minimum pricing.
“Now that minimum pricing has been rejected, we call on all parties to come together to build
consensus around alternati ve, more effective, legal tax-based measures to address alcohol
misuse. Reform of the UK excise duty system so that all alcohol is taxed on a fair and
responsible basis, according to alcohol content, offers that opportunity.”
- ENDS -

Note to Editors:
1. The proposed 45p a unit would have resulted 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 studies suggests 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. The UK Treasury is currently reviewing the alcohol taxation system, whilst the Home Office is
consulting on the introduction of a ban on alcohol sales below cost.
5. In 2010, the SWA commissioned two separate studies of the revenue impact of excise duty
reform based on up to date price elasticities. Reports by PricewaterhouseCoopers LLP and
Optimal Economics both concluded that reform could deliver in excess of £1bn extra revenue
every year.
6. For further information please contact Campbell Evans (0131 222 9231 and 07768 002 262) or
David Williamson (0131 222 9230 and 07730 496 151) at the SWA.

Scotch whisky distillers have urged MSPs to reject minimum pricing for alcohol when the
Scottish Parliament votes at the final stage of the Alcohol Bill’s parliamentary process
tomorrow (10 November 2010).
Distillers believe minimum pricing, as proposed by the Scottish Government, would have little
impact on alcohol harm but would violate EU and international trade rules, leading to copycat
trade barriers in export markets. This would undermine the industry and its Scottish supply
chain at a time of economic uncertainty.
At 45p a unit, the cost of an averagely priced bottle of Scotch Whisky in Scotland would
increase by 16% to £12.60, reducing the domestic market by nearly 13%. Value and own-label
Scotch Whisky brands would be particularly impacted.
The SWA called on political partie s to seize the opportunity of a current UK Treasury review to
argue for a fairer and more respon sible excise duty system where all drinks are taxed on the
same basis. In tandem with a ban on alcohol sales below tax, a legal and transparent ‘floor
price’ for alcohol could be set , addressing issues around the pricing of certain drinks.
Gavin Hewitt, SWA Chief Executive, said:
“We urge MSPs to reject a minimum pricing proposal that simply will not work, fails to meet
the basic tests of EU law, and which would significantly damage Scotch Whisky at home and
abroad.
“Political parties should inste ad look at an alternative UK-wide solution to concerns around the
pricing of certain drinks. Excise duty reform so that all drinks are taxed on the same basis,
according to alcohol content , and a ban on sales below tax, is a fair and socially responsible
way forward. It would also secure over £1bn a year 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. The UK Treasury is currently reviewing the alcohol taxation system, whilst the Home Office is
consulting on the introduction of a ban on alcohol sales below cost.

5. In 2010, the SWA commissioned two separate studies of the revenue impact of excise duty
reform based on up to date price elasticities. Reports by PricewaterhouseCoopers LLP and
Optimal Economics both concluded that reform could deliver in excess of £1bn extra revenue
every year.

6. For further information please contact Campbell Evans (0131 222 9231 and 07768 002 262) or
David Williamson (0 131 222 9230 and 0 7730 496 151) at the SWA.