Examination of Witnesses (Question Numbers
1160-1179)
MR PAUL
KELLY, MR
NICK GRANT
AND MR
GILES FISHER
15 OCTOBER 2009
Q1160 Chairman: Do not the answers
that you have just given undermine the issue of using taxation
as a means of any form of health policy around alcohol?
Mr Fisher: It is a problem. Tax
gets set at a certain level and people are prepared to sell below
that level. That is a problem, undoubtedly. We do not do that.
Q1161 Chairman: You do not do that
but you have done it on one occasion before?
Mr Fisher: We have sold below
cost price. We have not sold below VAT plus duty. We have sold
below cost price on a half-price champagne promotion last Christmas,
but it is not something that we regularly do on pallets of beer
or anything else.
Q1162 Chairman: No, but you could
do it if you chose. Do you think it undermines using taxation
on alcohol as a means of protecting public health?
Mr Kelly: I think what I said
in my answer was that I think it is the sort of thing that the
Government might want to consider, bringing in instruments to
prevent people selling below the cost of duty plus VAT as a simple
definition of below cost selling. Above that I think it gets difficult
because our costs of doing business will all vary.
Q1163 Dr Naysmith: If we can return
to the Sheffield University studies of Dr Meier, who came in and
told us that if drinkers were to keep to the Government's recommended
guidelines alcohol sales would fall by 40%, do you think that
would be a reasonable thing to say or do you dispute these figures?
I know we are talking about commercially sensitive data, but it
would be a big drop, I am sure you would all agree with that,
because we are talking about 14 or 21 units a week for female
and male.
Mr Kelly: It comes back to what
we have said previously, 7% of the population for 30% of the alcohol
consumption, and it seems to me that that is where we need to
be targeting the action, not necessarily taking whole population
approaches.
Q1164 Dr Naysmith: Yes, but what
it does mean is that the commercial interest of your company is
to encourage people to drink more than the Government's recommended
guidelines, surely.
Mr Fisher: No, that is absolutely
not the case for us.
Q1165 Dr Naysmith: Why it is not
the case?
Mr Fisher: Because it is all about
quality for us. When we promote wine, for example, we tend to
find people spend exactly the same amount; they just buy better
quality wine. It is all about trading up through quality for us
and that is what determines the way that we select our products.
Q1166 Dr Naysmith: That comes to
some interesting questions that will probably come in later on
about the strength of wines. Mr Kelly, how about you on the question
of commercial interest, that you sell as much alcohol as you can?
Mr Kelly: We would not encourage
people to drink more than the recommended number of units per
week. I think there is a balance to be struck here between corporate
responsibility and personal responsibility. Without that balance
corporate responsibility will not work. We are, all of us, very
happy to give more messages, improve the quality of information,
but personal responsibility is an important part of this, which
is why only the education argument, the multi-faceted approach,
will work. You seem to look at it that it is about the supermarket
or it is abut the drinks industry and somehow taking action there
and not about tackling issues about personal responsibility that
drive people to over-consume. We would not encourage people to
drink more than the recommended units per week.
Q1167 Dr Naysmith: Do you have any
objections to the more stringent prohibitions that have been brought
in by various governments to control smoking, which clearly is
a product which makes people ill but exactly the same arguments
apply?
Mr Kelly: I think there is a difference.
It is seen that one cigarette smoked is going to do harm; there
is no evidence that suggests that one glass of wine, 14 or 21
units of alcohol a week is going to do harm. I think there is
a difference between the two products.
Q1168 Dr Naysmith: There is a little
bit of doubt about these figures but, certainly, consuming more
than 21 units regularly for most people would be harmful. If we
cannot control this by education, cultural changes, and so on,
would we be right to try and control it by more stringent measures?
Mr Kelly: If those who consume
harmfully do not respond, then that would be an issue that policy
makers would have to look at.
Q1169 Dr Naysmith: Do you have anything
to add, Mr Grant, to this question of the contribution of alcohol
to your profits and, therefore, you have to push it hard?
Mr Grant: Again, on the theme
of things we should do more of and better that we currently have
in view, I think there is still a long way to go in very basic
alcohol unit education for people. I think that people are not
really as aware as they should be, by a long way, of what they
are actually consuming when they share a bottle of wine with their
spouse, I do not think they have that heightened sense, and I
think you can achieve that heightened sense very effectively.
I think all supermarkets are starting to look at different initiatives
from the point of sale, education and information for customers
in the various aisles. Our particular one is very much to lean
on the units and give examples of what the units are in what.
I think for me that is the thing to try first.
Chairman: Let us move on to Charlotte.
Q1170 Charlotte Atkins: Mr Grant,
in your submission you state, "We do not believe that increased
purchasing of alcohol directly impacts on increased excess consumption."
Could you explain that to me a bit more, because they are not
drinking it? If they are not drinking the alcohol, what are they
doing with it?
Mr Grant: When they buy on promotion?
Q1171 Charlotte Atkins: Buying it
on promotion or where you have any increased purchasing, one assumes
that you have increased consumption. Are you saying that the two
are not linked?
Mr Grant: This is not a pub, so
people are buying it for some other purpose. They have, let us
assume, at least to get into the car, put it in the car and get
home in a way that they obviously would not be incentivised to
drink immediately in a pub; so there is a very different set of
decisions, I think, which go on in relation to the consumption.
Our evidence suggests that when people buy into a promotion, they
normally buy in just at the level they need to get the promotion—they
do not buy van loads but they do tend to buy in—and then
you will see a decline in the next period of time. I forget the
exact figures but, I think, in the next month, if asked, people
will say, "My consumption in that month has not changed."
So people are very canny. They buy into a promotion, they switch
brand maybe because of that promotional offer, they take it and
then they store it and they use it over a period of time.
Q1172 Charlotte Atkins: That certainly
would not be the case if the promotion is perhaps linked to the
World Cup or something like that. One assumes that if it is linked
to a big sporting event which people are going to be watching
on television possibly in a social situation, they will be drinking
a large amount during those particular games as part of the experience
of watching football.
Mr Grant: Certainly there are
particular cultural events in the country which do drive the demand
for alcohol. There is no question about that. I think, with the
advertising codes we have, we are always trying to present alcohol
as something to be shared in groups, not for an individual to
drink on their own, for the social situation. There is quite a
lot of regulation and codes around that. I would be of the view
that if people take alcohol away and have friends around for an
event, then it is a perfectly legitimate thing for them to do.
Q1173 Charlotte Atkins: Obviously
you do research into how your customers drink. In a normal session
how many units would you suggest they would normally drink? Would
it be more than four units at a go?
Mr Grant: I do not think we would
have that information.
Q1174 Charlotte Atkins: What about
Mr Fisher and Mr Kelly? Is your view that increased buying of
alcohol on promotion differs? Mr Fisher, you do not do these sorts
of promotions, but, Mr Kelly, where you have promotions, do you
see a read-through to increased consumption or are you with Mr
Grant, saying that actually people buy when the alcohol is on
promotion and then spread their consumption over the subsequent
weeks?
Mr Kelly: We have recently conducted
some research with customers on that very issue and 35% buy it
and consume over time, half buy it to either share with family
and friends or to save it for a social occasion, which might be
something like watching the World Cup. So the very vast majority
of customers are buying in to consume over time, and we see the
same patterns in sales that Nick has referred to, which is people
will buy into the promotion and then you see a fall-off in subsequent
weeks in terms of alcohol sales.
Q1175 Charlotte Atkins: In that case,
your promotions are self-defeating, in the sense that you get
them into the store for the promotion and after that the sales
go down.
Mr Kelly: Different promotions
attract different customers.
Mr Fisher: I think that is something
which is similar in our business as well. We do run promotions.
We do not make a habit of selling alcohol below cost was the point
I was trying to make, but certainly if we run an offer on, say,
a six bottle purchase of wine for a period of time, we will see
sales go up during that week, obviously, and then we see that
two or three weeks afterwards the sales are down. The purpose
of running the promotion for us is not necessarily self-defeating,
it is to bring people into Waitrose who might buy their wine perhaps
in one of our competitors. That is why we promote and that is
why suppliers will promote, to try and switch people between brands.
Charlotte Atkins: I think there are going
to be some more questions on promotions later on, so I will leave
it there. Thank you.
Q1176 Chairman: What do you think
about the data that is on the Department of Health's website that
says that 75% of alcohol turnover is consumed by hazardous and
harmful consumers. You do not have a view?
Mr Fisher: It is not something
I am aware of.
Mr Kelly: Kelly: It is not something
we have heard.
Chairman: Perhaps you could have a look
at the website and write to us on that.
Q1177 Dr Taylor: I think most of
us would have a bit of a personal interest in this question, because
as MPs we do not want to be caught drink-driving in our own patches
particularly, or anywhere! Weaker wines and beers: what are you
doing to encourage people to drink these? Are there any palatable
low alcohol wines and beers. I think I am going to look at Waitrose
first. Do you promote any low alcohol wines and are any drinkable?
Mr Fisher: Yes, they are drinkable.
We have several low alcohol beers. We have increased the range
over the last couple of years and we have promoted those at times
as well. We sell a lot of lower alcohol wines which are naturally
lower in alcohol, perhaps from Northern Germany or English wines
which will come in at around about 9-10% ABV because of the way
they are made, but it is not a huge slice of our business. We
do sell an awful lot of English wine, which tends to be lower
in alcohol just because of the climate.
Q1178 Sandra Gidley: I have to confess
to being a Waitrose shopper—I represent a Hampshire constituency,
so you might expect little else, and actually it is the only supermarket
in my constituency—but I have never noticed any attention
being drawn to the fact that products are low alcohol. I have
occasionally seen a bottle of weight watchers' wine tucked away.
Have you never thought of highlighting the products?
Mr Fisher: With the beer we do
put them all in one place and we do mention on the ticket they
are lower alcohol.
Q1179 Sandra Gidley: The beer, yes.
Mr Fisher: The wine will sit in
its region that it comes from, apart from the reduced alcohol
wines which until very recently have only come in from California,
but my understanding is the EU legislation has changed recently
and the industry can de-alcoholise wines, which previously they
could not. As that develops I am sure that a lot of manufacturers
will produce wines which are de-alcoholised and then we can make
more of a play of it, but, as I said before, the driving factor
for us is quality and, if we list a wine that it is lower in alcohol
naturally, it is because it is a good quality wine.
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