Examination of Witnesses (Question Numbers
542-559)
MR DEREK
LEWIS AND
MR DAVID
POLEY
2 JULY 2009
Q542 Chairman: I welcome you to the
fourth evidence session in our inquiry into alcohol. For the record
perhaps you would give your names and the positions you currently
hold.
Mr Lewis: I am Derek Lewis, chairman
of the Drinkaware Trust.
Mr Poley: I am David Poley, chief
executive of the Portman Group.
Q543 Chairman: Who funds the trust
and the Portman Group, and what is the relationship between the
two bodies?
Mr Lewis: The trust is funded
by the alcohol industry and at this point in its history the Portman
Group has been the largest single contributor to its funding.
Mr Poley: The Portman Group is
funded by nine major drinks producers and we are committed to
giving the Drinkaware Trust about £2.2 million a year for
each of the first three years of its operation.
Q544 Chairman: I understand that
at the moment you have some targets for raising funds as opposed
to a system of voluntary contributions. Is that something you
can share with us?
Mr Lewis: The trust was set up
in 2006 and commenced its activities at the beginning of 2007.
A memorandum of understanding was signed between government and
the devolved administrations and the alcohol industry, in this
case represented by the Portman Group, which set some targets
for the funding of the trust of £3 million, £4 million
and £5 million respectively for the years 2007 to 2009.
Q545 Chairman: Do the major supermarkets
contribute to the fund?
Mr Lewis: They do. At this point
the bulk of the funding comes from the Portman Group but we get
money from the major supermarket and off licence chains as well
as a number of members of the on trade pub companies.
Q546 Dr Stoate: I want to ask whether
the Drinkaware Trust meets its target. Mr Lewis, you said that
you had targets over three financial years. Are you anywhere near
that in terms of the money you get?
Mr Lewis: We are some way off
it. To be honest, the current level of funding is disappointing.
For the past two years it has been approximately £2.7 million
and this year it may be rather higher than that, but it will still
be about 40% short of the £5 million target. There are some
extenuating circumstances in that the trust got off to a somewhat
slow start and did not spend in its first year and a half the
majority of the funding subscribed so that made it difficult to
ask for additional money from the industry at that time.
Q547 Dr Stoate: But you are 40% short
on your current target. That is not very encouraging. What will
happen after three years because you have got only three years'
funding from the Portman Group?
Mr Lewis: That is the big issue.
Our attention now is focused not on the first three years but
what happens after the end of this year. We are in the middle
of a review of the Drinkaware Trust one of the key objectives
of which is to establish a rather better basis for funding for
2010 and beyond. That needs to achieve two things: first, to ensure
there is an adequate minimum level of cash funding from the industry,
which I suspect needs to be at least at the £5 million level
targeted for 2009; second, to ensure we have wider participation
across the industry and an equitable basis for asking members
of the industry to provide contributions.
Q548 Dr Stoate: Since they are all
voluntary and you have managed to achieve only just over half
of what you said you would start with, do you have much optimism?
We are talking about £5 million-plus in future when the Portman
Group has already said that it will give you only three years'
funding.
Mr Lewis: I am always optimistic.
Q549 Dr Stoate: But in real terms
you have about nine months to sort this out?
Mr Lewis: We have rather less
than nine months because we need to ensure we have visibility
of future funding before we get to the end of this year; otherwise,
it will be quite impossible to plan our programme of activity
for 2010.
Q550 Dr Stoate: What does that tell
you about how the drinks industry sees you?
Mr Lewis: I think there are some
extenuating circumstances over the past couple of years: not only
the slow start but the surplus of cash on the balance sheet and
to some extent the economic environment. We are going into the
review with a very clear set of objectives which are essentially
those I have just described supported by government. There is
support from the industry to achieve a successful outcome. As
part of the Drinkaware Trust review we also have the benefit of
an independent audit of the effectiveness of the trust during
its first two and a half years' existence. That is nearing completion
and it will reinforce the need for at least £5 million of
cash funding from the industry for the trust to be able to be
effective.
Q551 Dr Stoate: I agree with that,
but while we are at it let us do some naming and shaming. Tesco
provided a grand total of £75,000 out of gross profits of
about £2 billion last year. Waitrose managed a cool £5,000.
I do not know about this year, but Asda did slightly better at
£30,000 last year, and Sainsbury's and Lidl provided about
£50,000. That not much of a ringing endorsement, is it, if
the retailers can come up with a total of £95,000 this year?
Mr Lewis: I think the proof of
the pudding will be in the success of our current set of discussions
with the industry. If out of that we can come up with a formula
whereby the industry commits to that minimum level of funding
in which all sectors of the industry play an equitable part that
will be a success. We can then consign the details of the first
three years of funding to history. In my view that is our key
task at present.
Q552 Dr Stoate: I am a bit of a cynic.
To put a straightforward question, how does the industry funding
of social marketing campaigns compare with the money spent on
marketing their products? How would you put those two in context?
Mr Lewis: I am not sure you can
necessarily equate the two. I am sure those from the industry
would give a better explanation of that. Clearly, the amount of
money that so far has been subscribed to the Drinkaware Trust
is dramatically less than the amount the industry spends on marketing
and promotion.
Q553 Dr Stoate: Mr Poley, we are
talking about £2½ million for the Drinkaware Trust.
What is the advertising spend for the industry?
Mr Poley: I am not exactly sure
but I would guess it is in the region of £150 million to
£200 million a year.
Q554 Dr Stoate: So, we are talking
about 1% or possibly 2% of the actual advertising spend being
spent on social awareness campaigns?
Mr Poley: Quite possibly, yes,
but we are comparing two different things. Money that is dedicated
to social responsibility campaigns and the promotion of responsible
drinking should not be compared with brand advertising, the implication
being that the latter encourages or promotes irresponsible drinking.
Dr Stoate: But it gives you some reasonable
comparison. If the industry is prepared to spend £150 million
on advertising its products and only £2½ million on
promoting social responsibility in drinking I think we can draw
our own conclusions.
Q555 Chairman: Do supermarkets do
things outside your organisations and within their own stores
to promote social responsibility?
Mr Poley: I should clarify that
the Portman Group is a drinks producer organisation, we are the
dedicated social responsibility organisation for drinks producers.
We can speak only on behalf of that sector of the industry.
Q556 Chairman: Do you think that
they spend more money on social responsibility than they put into
the trust?
Mr Lewis: They do. It varies according
to the supermarket chain but they certainly have their own initiatives
in many cases. They also provided in-store space for a campaign
that we ran last year to promote the messages we were trying to
communicate about sensible drinking, and the industry which includes
the supermarket chains proposes to take a further initiative to
address the young adult market which is one we have not had the
funds to address at this point.
Q557 Jim Dowd: Supermarkets retail
substantial volumes of own label product. Does that not bring
them within your purview?
Mr Poley: No. Our nine member
companies will account for about 50% to 60% of the UK alcohol
market in terms of value.
Q558 Jim Dowd: Would they tend to
be the people from whom the supermarkets get their own label stuff?
Mr Poley: I do not believe so.
Our member companies will generally have well-known premium brands
as opposed to supplying the supermarkets with own brand label
stuff.
Q559 Dr Taylor: As the Portman Group
is funded by the drinks industry I admit a conflict of interest
in that I have a very small number of Diageo shares. I shall not
enlarge on that. Mr Lewis, you are quite an experienced witness;
you have appeared before us in other inquiries in the not too
distant past. You mentioned the effectiveness of the Drinkaware
Trust which is to promote sensible drinking. Could it be that
the Portman Group is looking to reduce your funding because you
are being effective in promoting sensible drinking which is what
we want but not what the drinks industry wants?
Mr Lewis: The Portman Group has
been the most stalwart group in funding the trust.
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