Examination of Witnesses (Question Numbers
400-419)
DR PETRA
MEIER AND
MS LILA
RABINOVICH
14 MAY 2009
Q400 Chairman: I was going to ask
who actually paid for this study to be done, or both of these
studies, if there are two?
Mr Blood: I believe it was SAB
Miller.
Chairman: We will move on to Charlotte.
Q401 Charlotte Atkins: Mr North,
we heard earlier from Mr Benner that probably 50% of young people
pre-load before they go out to maybe a pub or a bar of some sort.
What would you say encourages young people to pre-load?
Mr North: I am not sure I have
the answer to that question. It is a trend that I think has developed
over, probably, I would guess, the past 30 years or so. It is
not a trend that I remember when I was a young person in those
sorts of age categories. As we heard from the Sheffield researchers
this morning, probably the greatest trend over the past 20 or
30 years in this country in terms of the growing access to alcohol
has been growing affluence rather than access directly to alcohol.
I suspect that would have something to do with it, that there
is more alcohol in people's homes, or whatever, but I am not an
expert on that subject.
Q402 Charlotte Atkins: Mr Benner
has just been saying that there is a great divergence between
the price of alcohol in pubs, which has been going up, and the
price of alcohol in supermarkets, which has been going rapidly
down. Do you think that has an implication in encouraging particularly
young people to pre-load on the basis of either promotions in
supermarkets or historically low prices of alcohol in supermarkets?
Mr North: The price of alcohol
in our shops and, I think, in other supermarkets has not been
coming down, for example, relative to the price of food. I would
not want to you think that somehow alcohol prices have, in real
terms, come down greater than food prices. Does that contribute
to the risk that young people will pre-load? It is a complicated
issue about why it is that people choose to drink in their home,
choose then to go out and drink some more. I am not sure I would
be able to say that price was the primary factor in encouraging
young people to do that.
Q403 Charlotte Atkins: Do you think
it is acceptable to sell beer more cheaply than water?
Mr North: Again, I am not sure
that there is a direct comparison to be had there. I certainly
would not want people to reach the conclusion that somehow those
were two interchangeable products—they are not—but
some bottled waters sell at premium prices and some sell at lower
prices. As I think I have already said, we would accept the conclusions
that Sheffield and others have reached that the price of alcohol
has a bearing on consumption and they have a bearing on those
who choose to harm themselves through excessive consumption. As
I have said, we are prepared to play a constructive role on that,
but this is something that has to be led by government and has
to involve the whole industry.
Q404 Charlotte Atkins: So you do
not think that the supermarket sector has anything to apologise
for in terms of the very low price of alcohol units that are sold
via the supermarket aisle or the promotional display?
Mr North: I do not think we would
do the subject of tackling alcohol abuse a service by focusing
solely on the issue of price, and I think that is what I heard
from others who have given evidence. I do think price has a part
to play. The retail of alcohol and, indeed, the on-trade are highly
competitive sectors on the whole. Like other areas, this is one
where competition, I think, has been to the great benefit of the
majority of people in this country by making products more affordable
particularly for those on low incomes, and that is something that
we are very cognisant of as a retailer. But I would accept, as
I have said, that there is a linkage between the price of alcohol
for a small group of people and the risk of alcohol abuse and,
as I said, we play a constructive role on that.
Q405 Charlotte Atkins: Can you tell
us what has been your most successful price promotion on alcohol
in recent times?
Mr North: I am afraid I could
not tell you without notice of the question.
Q406 Charlotte Atkins: Would you
say that most of your promotions in terms of alcohol take place
at Christmas and in the summer, or is it right the way through
the year?
Mr North: Christmas, obviously,
is the most important period in terms of promotion. It is a time
when people feel that alcohol plays a part in family celebrations,
et cetera. As I think I was mentioning earlier, we have a wine
festival on at the moment. What that tends to do is encourage
our customers to try, on promotion, wines that are generally at
a slightly higher price point than they would normally purchase
at, and that is something we see in our research: that when people
buy a promotion, generally they are buying at a 20% higher price
than they would normally buy were that product not on promotion,
if you follow.
Q407 Charlotte Atkins: Your margins
are not universal, are they? You have different promotions in
different stores. Is that correct? You do not have a national
scheme whereby you have promotions in every store. You have different
promotions in different stores.
Mr North: No, promotions tend
to be national.
Q408 Charlotte Atkins: So to suggest,
as has been suggested to us, that the biggest promotions are targeted
at stores in areas of highest deprivations or in areas where there
are more students is not true?
Mr North: I think that would be
untrue.
Q409 Dr Stoate: Most of the question
has been covered, but you have said, Mr North, quite rightly in
our view, that there is a link between price and consumption and
ultimately a link between price and harm. I think most people
would accept that, and I think you are honest enough to say so.
What I would then say is: how do you justify loss leaders now?
We find it difficult to understand how some supermarkets are prepared
to sell alcohol at below cost. How do you justify that?
Mr North: We do not set out to
sell alcohol below cost, and I think most of our alcohol is not
sold below cost, most of it is not, indeed, sold on promotion.
It is, as I have said, however, a highly competitive sector and
customers do find the idea of promotions on alcohol something
that is an important part of the way that they shop in supermarkets
and elsewhere, and, as I think I have said, most people, most
families are purchasing alcohol responsibly and then consuming
it responsibly. The question is how do we help those people who
are not consuming and purchasing responsibly. I think the whole
debate on pricing, as the Government has said, is about trying
to strike that balance.
Q410 Dr Stoate: A final point then.
Do you believe it is ever acceptable to sell alcohol at below
the price of water? There are many examples where, for example,
lagers on promotion actually work out per litre less than bottled
water.
Mr North: The difficulty, with
respect, I have with that question is I am not sure why it is
sensible to compare alcohol with water. I do not think we would
ever want to make that comparison. I would say that alcohol is
cheaper than a lot of products, one of which, in some cases, might
be premium types of bottled water.
Q411 Dr Stoate: The reason we are
asking it is simply because we want to know whether supermarkets
and others are behaving responsibly, and, obviously, in our report
we will need to take a view on whether it is responsible for any
organisation, effectively, to price something so cheaply that
it is almost bound to encourage excess in some people.
Mr North: I do not think the fact
that it would be possible to find isolated examples where alcohol
is cheaper than premium water is a major contributor to the debate
on alcohol.
Q412 Dr Stoate: No, but price is,
and that is what we are trying to get to, and obviously we have
to compare it to something. There is no point in comparing the
price of alcohol with baked beans, but we do believe that it is
reasonable to compare alcoholic drinks with soft drinks. We are
just using that as an example.
Mr North: Yes, but what we say
in our stores and on our point-of-shelf labelling is precisely
the opposite of that, which is that customers who consume alcohol
also need to make sure that they keep their hydration levels up,
et cetera, and consuming water is therefore important.
Q413 Dr Stoate: I will have to look
out for these labels. I confess, I have never seen them, and I
do go to Tesco fairly regularly. I will look out for them in future.
Mr North: I would be delighted
to show them to you.
Mr Beadles: I have found one for
the committee. It is a Tesco brand promotion.
Q414 Chairman: Jeremy Blood, can
I ask you about this thing in relation to comparative prices between
alcohol and other drinks? What about this issue about the cost
of soft drinks in public houses being the same as alcohol? Is
that something you would agree with?
Mr Blood: As I said, in the business
that we run we are leased pubs, so we do not control the retail
pricing in the pubs—I wanted to explain that—but,
generally yes, a pint of a soft drink can, in some pubs, be comparable
with the price of an alcohol drink.
Q415 Chairman: If I go in a pub and
I am driving, I would have a soft drink. Do you not think that
might encourage people to go for the stronger rather than the
less strong, if you are paying the same price? I do not mean people
who are driving.
Mr Blood: I think for people who
want to drink soft drinks, there is usually a very clear choice
why they want to do it and they will buy them.
Q416 Chairman: You do not think if
some somebody was offered alcohol at a pound and somebody was
offered a soft drink at a pound or 50p, that they would probably
go for the latter as opposed to one of those drinks at a pound,
alcohol or a soft drink? What would marketing say about that?
Would it not say they would be more likely to by the 50 pence
drink?
Mr Blood: It goes back to price
elasticity again. If you sell products more cheaply you will sell
more of them. I would not dispute that if you sold soft drinks
more cheaply you would sell more soft drinks in pubs.
Q417 Chairman: Have any studies been
done on that at all to your knowledge?
Mr Blood: No sort of controlled
public studies, but, yes, retailers will play around with price
and if you sell something more cheaply you will sell more of it.
I do not dispute that.
Q418 Dr Naysmith: Mr Beadles can
start with this but it is really for everyone. For quite a long
time now since there has been concern about excessive alcohol
consumption, the trade has been interested in voluntary arrangements
and voluntary agreements, saying that they want to do something
about it. You will all be familiar with the recent KPMG evaluation
of voluntary agreements, and they showed extensive breaches of
the voluntary code. Why do you think these voluntary approaches
fail?
Mr Beadles: I do not think they
fail, firstly. I think KPMG actually showed a lot of very good
practice. I think the issue with a totally voluntary approach
is that it only applies to the people who are in and sign up to
it. When we looked at the businesses from an off-trade perspective,
which, therefore, would fall within our membership and the producer
side and their compliance, their compliance level was very high,
but when you are trying to take that voluntary approach down to
small independent businesses and people who are genuinely not
interested in this stuff, then it is very tricky. I think a voluntary
approach has an advantage. It tends to be faster and it gets to
the core of big business quicker, but it is not going to ever
get overall coverage. Having said that, there is lots of legislation
that is not complied with by lots of business as well. So I think
voluntary approaches have a hugely important role to play, but
you have always got to recognise that there will be some people
who sit outside them.
Q419 Dr Naysmith: You are not suggesting
that KPMG's findings were those who were not signed up to the
voluntary agreements, are you?
Mr Beadles: There were a lot of
them who were not signed up to the voluntary agreements. A lot
of the businesses they found were not compliant; were not signing
up. Any business who is in our membership is operating at that
point in time Challenge 21, now moving towards Challenge 25; so
any business that was in our membership would have been signed
up to that approach. There are businesses who are not in our membership
who may not have been signed up to that approach.
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