Examination of Witnesses (Question Numbers
380-399)
DR PETRA
MEIER AND
MS LILA
RABINOVICH
14 MAY 2009
Q380 Stephen Hesford: Seventy-five
thousand pounds in a multi-billion pound company is tiny, almost
derisory, do you not think?
Mr North: I have explained to
the committee what we are doing. All of our own brand alcohol
is labelled with the Department of Health's recommended labelling.
I have explained that we have "point of sale" information
that is intended to encourage safe drinking. We train our staff
a great deal. We have had a policy called Think 21, Challenge
21 as the Government and others call it. We are extending it over
the course of the coming weeks to Think 25, so that we are going
to be asking our staff, and training our staff again, to challenge
everybody who they believe is 25 and under and ask them "Can
you prove that you are 18?" We are also very committed to
the community alcohol partnerships that I think, for the first
time really, start to address some of the key underlying issues
here about how we raise awareness among young people and among
families about what levels of alcohol consumption actually cause
harm. Indeed, one issue that I think as a society we should be
very clear on, is what is the legal age of drinking. In many cases
people do not understand that. I am afraid I think that measuring
our direct commitment to the Drink Aware Trust as a facet of our
commitment to this issue is wrong.
Stephen Hesford: I think you protest
too much. I think I have hit a nerve. What do you say?
Chairman: Can we move on!
Q381 Stephen Hesford: You said before,
David, that your evidence is that your customers behave responsibly
in relation to alcohol. What evidence do you have for that? Why
do you know that?
Mr North: We do a lot of customer
research, both through our Clubcard and directly in conversations
with customers and through focus groups.
Q382 Stephen Hesford: Can you supply
that to us, your focus group work, that enables you to say with
confidence that your consumers behave responsibly?
Mr North: Yes. We have summarised
that in the evidence.
Q383 Stephen Hesford: I know you
have, but could you supply some of the raw data to us?
Mr North: Yes.
Q384 Stephen Hesford: Jeremy, you
said before that the OFT warned you away from some kind of voluntary
agreement about marketing and where you place things? Can you
supply us with the correspondence with the OFT which actually
sets out that they were telling you, basically, not to come to
this voluntary agreement?
Mr Beadles: We can supply the
correspondence which sets out the conversations that we had with
them about the lives that we could get to, and we can also supply
advice from our own lawyers. A lot of the time the OFT ask us
to take our own advice on this; so we are happy to supply that.
Q385 Stephen Hesford: Minimum pricing.
This is for everyone who wants to come in on this. The Sheffield
report on minimum pricing, especially in relation to elasticity
of demand for alcohol, Jeremy Blood: do you accept the findings
of the Sheffield report? Would you be in favour of minimum pricing?
Mr Blood: We are not in favour
of minimum pricing. I have read the Sheffield report. It draws
conclusions about affordability and price. We accept some of the
conclusions. Other independent economic advice draws slightly
different conclusions from it. As with all research, there is
a range of conclusions that can be drawn from what is a complex
set of data. Why do we, in principle, not support minimum pricing?
We believe that where misuse is happening and where people are
drinking more than is good for them or using alcohol in the wrong
way, those are the people that will not change their behaviour
if you apply minimum pricing, they will carry on misusing, and
you will not address the proper concerns that society has got
about the misuse of alcohol through that blanket approach.
Q386 Stephen Hesford: Do you not
accept that there must be, like any product, some kind of relationship
between price and consumption?
Mr Blood: Of course, there is
price elasticity. Yes, of course there is.
Q387 Stephen Hesford: In relation
to tobacco, for example, if you increase the price of cigarettes,
demand tends to go down, consumption tends to go down, and that
is a well trodden public health path. What is the difference between
that well trodden public health path and alcohol?
Mr Blood: Most people who use
alcohol use it responsibly and it does not affect their health
or damage it. If you use minimum pricing ,or pricing, as a way
to drive down consumption, in our view you are not addressing
the people who are misusing alcohol, you are addressing the majority
of people who are using it responsibly, so you are not addressing
where the problems lie. We would much rather see action to address
where there are problems from alcohol.
Q388 Stephen Hesford: The other Jeremy,
in relation to the Sheffield report.
Mr Beadles: We take the same view,
and we think there are other economic studies by CeBR and Oxford
Economics that I think should be taken into account by this committee.
We certainly take the view that the people who misuse alcohol
are the least responsive to price changes. We do not argue at
all that there is a relationship between price and consumption,
but we do think that there is a lot of evidence to suggest that
there is not a direct link between price and alcohol misuse. If
we look at the pricing of alcohol across Europe, there are ranges
of different levels of pricing which do not accord to alcohol
harm. We actually have a very high duty rate in this country already,
and the average price on alcohol in comparison to our European
neighbours is very substantially larger. The average bottle of
wine in this market costs £4.20; the average bottle of wine
in France costs £1.40. We are not convinced that there is
any relationship of that nature. Evidence from around the world
where pricing mechanisms, taxation mechanisms have been used—because
actually minimum price has never been introduced on a national
basis—suggest that it can affect consumption but it does
not affect misuse.
Q389 Dr Stoate: We have heard evidence
this morning, which has been peer reviewed and is academically
based, that if the minimum price per unit were 50 pence it would
save 3,000 deaths a year. Are you saying that is complete rubbish?
I think that is a pretty compelling argument, and it has been
peer reviewed, backed up by many academic studies. We think 3,000
deaths a year with a minimum price of 50 pence per unit is quite
compelling, but you do not agree with any of it?
Mr Beadles: I would like to reduce
the number of alcohol-related deaths, but I do not agree that
introducing a minimum price would have that direct effect.
Q390 Dr Stoate: You totally dispute
the evidence that we have heard this morning.
Mr Beadles: Yes, I do, because
I think the basis on which it is made is that people who misuse
alcohol drink cheaper drinks than people who are moderate drinkers—we
are not convinced that that is the case—and that they, as
a result of a price increase, would stop drinking or would reduce
their drinking—again we are not convinced that is the case.
Therefore, we are not convinced that there is a direct run-through
between pricing going up and those people who drink to excess
reducing their alcohol consumption.
Q391 Dr Stoate: That is bizarre.
We know that those resistant drinkers are less responsive to price
but, nevertheless, they are responsive to price and, because they
drink so many more units, they actually end up with a bigger drop
in consumption than moderate drinkers.
Mr Beadles: There is no doubt
that if you get to any level on price you will create a responsiveness.
I do not believe that 50p a unit would have that responsiveness.
I have no doubt that if you got up to 80, 90, one pound a unit,
you would have a responsiveness in terms of behaviour but, also,
at that point the moderate consumer would be seriously punished
for their drinking.
Q392 Stephen Hesford: To David. In
terms of minimum pricing, we have heard that some supermarkets
and other organisations in principle would not mind a minimum
pricing arrangement. What is Tesco's attitude to that?
Mr North: I was here this morning
to listen to the evidence from the Sheffield researchers and I
thought they made a very clear case that an increase in price
could have a substantial impact, both in terms of reducing consumption
and, indeed, in terms of targeting those who are at most risk
of causing harm to themselves, or more widely. Our position for
sometime now has been that we are very prepared to play an active
and constructive role in discussions on minimum pricing or, indeed,
the whole issue of pricing. What we have said is two things really.
One is that for action on price to be effective it has to be done
across the industry rather than on a unilateral basis, but, second,
for reasons of competition policy, competition law, this is not
something, frustratingly, that the industry can lead by itself:
those discussions have to be led by government. Reading what the
Home Office said yesterday in their Draft Mandatory Code, they
said that is not something they will pursue for now. So there
seems to be some gap between what the Government is saying on
this and the evidence that the Government commissioned through
Sheffield University. The Government has, however, said that they
want to continue to gather evidence on this. I think I would reiterate
what I said, which is that on this issue we are prepared to play
a constructive part.
Q393 Stephen Hesford: So, in principle,
you are not against it, but you think it needs more discussion
as to how we get there.
Mr North: I think I would find
it difficult to dispute what the researchers have said in terms
of the relationship between price and consumption and potentially
on to alcohol harm. I think there clearly has to be a balance
struck, and it seems to me this debate is about the balance to
be struck between targeting intervention at a level that focuses
on those who are causing harm and that does not disadvantage what
the Government has referred to as "a sensible majority".
So I think that debate does have to continue and, yes, we will
play a constructive part in that.
Q394 Chairman: Mike, could I ask
you on that: could minimum pricing save the Government?
Mr Benner: Pub beer prices over
the last 20 years have increased by over 140% compared to increases
over the same period in the off-trade of 39%. So the price differential
between on and off-trade is widening and, of course, that is shifting
consumption towards the off-trade and outside the regulators'
environment of the pub. So we are supportive of a minimum pricing
structure that would stamp out loss leaders and, therefore, make
it more attractive for people to drink in pubs.
Q395 Chairman: You think it would?
Mr Benner: I do think it would.
I think the price ratio at the moment is about five to one. If
a minimum price of around 40 pence was introduced, that would
make the ratio about three to one. Therefore, I think that is
enough for there to be a shift in consumption towards drinking
in community pubs.
Q396 Chairman: Jeremy Blood, we heard
earlier in the first session about the report that has not been
seen yet but tends to potentially undermine the Sheffield report
in terms of elasticity of demand of alcohol and the RAND report
as well. You alluded earlier to the fact that other studies do
not agree with that. Were you talking about this particular study?
Mr Blood: Yes, those are the ones,
and we would like to submit those reports as evidence.
Q397 Chairman: Has it been published
yet, what you all submitted?
Mr Beadles: I do not think that
the full report has been published yet. The summary, I believe,
the committee has been sent.
Q398 Chairman: Oh, I am sorry.
Mr Beadles: I know they were very
keen to come and give evidence to you.
Q399 Chairman: The one that we waved
at you is the RAND one and not the other one, the Sheffield one.
Mr Blood: Yes, that is the one
I was referring to. I misled you; I am sorry.
Dr Naysmith: It is the one that has been
commissioned by SAB Miller. Is that the one?
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