9 Supermarkets and off-licence sales |
"I think the biggest change in drinking habits
in this country is buying from supermarkets at heavily discounted
prices, drinking relatively quietly at home and developing either
dependency or physical problems.(Professor Gilmore)
"supermarkets are exhibiting the morality of
a crack dealer" (Professor Plant)
Changing patterns of purchasing
254. Until the 1960s there were a limited number
of off-licence outlets. Today alcohol is available in supermarkets
and other shops all over England at all times of the day and in
many shops for much of the night. According to Dr Kneale, in 1975
90% of all beer consumed in Britain was consumed in pubs and it
is now under 50%.
255. The following table from the NHS Information
Centre report, Statistics on Alcohol: England, 2009, shows
the alcoholic drinks consumed inside and outside the home from
1992 to 2007. Consumption in the home in the UK increased from
1992, peaking in 2003/04, since when figures have fluctuated.
There have been big increases in the consumption of wines and
spirits. In contrast, alcoholic drinks purchased for consumption
outside the home (i.e. in pubs, clubs and restaurants) decreased
by 31% between 2001/02, when this type of data was first collected,
and 2007. Purchases of beers fell by 36% over the period.
| Table 6: Household consumption of alcohol drinks, 1992 to 2007 (United Kingdom)
ml per person per week
|| All alcoholic drinks
|| Cider and perry
| Consumption within the home
| Consumption outside the home7
1. Data from 1992 to 2000 was collected from
the National Food Survey and has been adjusted to allow comparisons
to data collected from 2001/02 onwards from the Expenditure and
2. 'Beer' includes beers, lagers and continental
3. 'Wine' includes table wine, champagne and
4. 'Spirits' includes spirits and mixer, liqueurs
5. 'Other' includes rounds of alcohol drinks
bought and alcohol not otherwise specified
6. From 2006 the survey moved onto a calendar
year basis (from the previous financial year basis). As a consequence,
the January 2006 to March 2006 data are common between the 2005/06
financial year results and the 2006 calendar year results
7. Data on volumes consumed outside of the home
from 1992 to 2000 is not available
Source: Expenditure and Food Survey, DEFRA, historic
trend data can be accessed on the internet via the DEFRA website,
available at: http://statistics.defra.gov.uk/esg/publications/efs/default.asp
Problems of the increasing cheapness
and availability of alcohol
256. Among the consequences of changing patterns
of purchasing and consumption have been pre-loading. Mr Benner
of CAMRA told us:
There is evidence from Liverpool, John Moores University,
on preloading, that groups of young people, as much as 50 per
cent of those groups, are likely to drink at friends' houses or
their own houses to save money, because of the huge price differential
between on and off-trade, before they go out on the town.
'What we do know is that teenagers across the country
are typically getting alcohol from supermarkets and beginning
their evening drinking cheaply at their house or somebody else's.
The Canadians call this "pre-drinking"; in Scotland
it is "front loading". This is a way of cheapening drinking
so that you are pretty much drunk before you go out to drink more
expensively in pubs and clubs.
257. Of particular concern to witnesses were
- The increasing number of outlets;
- Aggressive promotions and significantly
discounted alcohol products
AVAILABILITY AND DENSITY OF OUTLETS
258. In the inquiry we examined the link between
the availability and consumption of alcohol.
The RAND Corporation has looked at the effect of "regulating
the physical availability of alcohol" including licensing
requirements for the production and sale of alcohol; restrictions
on the density of outlets; and reductions in the hours of sale.
The organisation reported that evidence from the US indicated
that the physical availability of alcohol (i.e. the number of
outlets in a given area) was related to alcohol sales, alcohol-related
traffic accidents and other alcohol-related harms. Studies from
Norway, Finland and Sweden also found some net effect from changes
in the number of alcohol outlets, including (in Sweden) the changes
in the sale of 4.5% beer in grocery stores. In Canada, provincial
alcohol retail monopolies were an effective method not only for
restricting hours or days of sale and outlet density, but also
for guaranteeing enforcement of minimum legal purchase age. Dr
Meier told us:
It is probably important to see that availability
works in two ways. One is in terms of making it easy for people
to get hold of alcohol around the clock or in terms of walking
distance, outlet density. There is also possibly a cultural signal
that at the moment we do not understand very well, there is very
little research. If you change the availability of alcohol towards
making it more available, is that a signal for especially young
people about the acceptability of drinking. That is something
that is in urgent need of some proper scientific research.
259. The LGA stressed that the regulation of off
licenses was the key to any effort to tackle problem drinking
in unregulated environments. Problems were not just associated
with supermarket sales:
Smaller off-licences can though be associated with
a number of specific problems in the public realm, for which local
authority interventions are central to tackling:
sale of alcohol to street drinkers, who congregate
in the area and cause public nuisance and crime and disorder;
sale of alcohol to minors, either directly making
underage sales, or by "proxy" sales via adult purchasers;
crime and disorder in terms of shoplifting (eg alcohol)
and robbery at the premises, or other criminal and anti-social
260. The Association of Convenience Stores thought
the answer lay in stricter enforcement rather than a change to
the licensing regime:
There are now sufficient powers in legislation to
allow relevant authorities to take action against premises that
they believe could do more to prevent alcohol harms. These laws
should be rigorously enforced, ensuring that where negligent practices
take place they are ended or the premise is shut down. Though
there is evidence that these powers are not being fully utilised
the Home Office has undertaken a programme to raise awareness
among practitioners, including regional seminars and the publication
of a toolkit. We question whether making significant changes to
the Licensing Act 2003 is necessary and instead would advocate
a focus on enforcement of existing laws...ACS' concern is that
further regulations will unnecessarily burden responsible retailers,
while issues regarding enforcement against problem premises will
261. On the other hand, the LGA informed us that
the system for reviewing licences was inadequate:
"off-licences are most commonly brought by the
police or trading standards, either following sales to underage
customers, or due to problems with anti-social behaviour, crime
and disorder. The licensing sub-committee considers evidence from
the licensee and members of the local community who have made
relevant representations, and decides whether to impose stricter
conditions on the licence, suspend the licence, remove the premises
supervisor, or even revoke the licence completely."
Unfortunately this system does not seem to be coping
with the problems and the Association is concerned that
"conditions in the current draft code proposed
in the Policing and Crime Bill are biased towards further regulation
of the on-trade and do not sufficiently address the contribution
of off-sales to problem drinking."
The introduction of a public health objective in
the Scottish licensing regime which we discussed in the last chapter
will also apply to off-licences and should make it possible to
reduce the density of shops selling alcohol off-licence.
AGGRESSIVE PROMOTIONS BY SUPERMARKETS
262. Sheffield University provided evidence of off-trade
Approximately 27% of off-trade alcohol consumption
is purchased for less than 30p per unit, compared to 9% in the
on-trade. 59% of off-trade consumption and 14% of on-trade consumption
is purchased for less than 40p per unit
We contacted a number of supermarkets to gather information
on promotions and own brand products. We found that around 30-40%
of alcohol sales came from promotions, and about 20% of alcohol
sales were from own brand products. Alcohol can be purchased at
remarkably low prices:
If you go out and buy three litres of 8.4% white
cider for £2.99 you are getting more than your weekly safe
limit in one bottle. That is as cheap as you can get it, about
10 pence a unit.
The ACS added that its members had "well documented
competition concern on below cost selling on all products, including
263. Many witnesses were critical of supermarkets
for their aggressive promotions of alcohol and for using alcohol
as a loss leader for pulling in customers. The RCN informed us:
There is evidence to suggest that alcohol is used
as a loss leader in supermarkets. £38.6 m of alcohol was
sold below trade price in the 2006 World Cup from supermarkets.
264. Witnesses were particularly concerned that teenagers
were able to get access to cheap alcohol:
Teenagers generally drink the cheapest stuff they
can get, not alcopops but cheap cider or cheap wine and the obvious
source of very, very cheap alcohol at the moment are the supermarkets
who are sometimes selling alcohol as a deliberate loss leader.
In my own local supermarket, Sainsbury, last time I was there
they had two separate alcohol promotions that involved offering
people drinks even though almost everybody had driven to get there.
There is alcohol at the end of almost every aisle.
265. In view of their concerns about the use of cheap
alcohol to compete for customers, critics suggested a number of
measures to improve the situation. One was to restrict promotions.
Dr Meier told us that Sheffield University had modelled the effect
of having restrictions on price promotions or a total
you had a ban that worked as intended,
that would be about comparable with the 40p minimum price in terms
of the overall effectiveness in terms of health and crime harms.
However there is a concern
that if you just banned price promotions it would
be very easy to circumvent by making the normal price drop. If
you wanted to play devil's advocate you might end up with lower
prices if you just banned promotions and did not do anything else.
It could be an effective policy if it was in combination with
something else 
The ACS similarly claimed that 'Even if promotions
were banned it is likely that larger retailers would still be
able to offer an incentive for shoppers through low product price.'
266. There was particular interest in major changes
to how alcohol was sold which came into effect in Scotland in
September 2009. Under the legislation, which is the first major
overhaul of Scotland's licensing law in three decades, ...consumers
will only be able to buy alcohol from off-sales between 10am and
10pm. In addition, stores will only be allowed to display alcohol
in a specific area which has been set aside for drink: customers
used to purchasing alcohol alongside food offers will now find
that they can only purchase beers, wines or spirits from specific
alcohol aisles. The act also requires places selling alcohol to
have a licence for the premises and a designated staff member
who has received a personal licence to sell drink after completing
training on the new legislation. In addition, promotions such
as 'three for two' or 'three for £10' can be banned by local
licensing boards if they consider the promotion to be 'irresponsible'.
Several witnesses supported the introduction of similar measures
in England. Professor Gilmore argued that "it would be very
easy to do what has been done north of the border to make alcohol
available only in certain areas in supermarkets so you do not
have a special offer at the end of every aisle."
267. Other recommendations for addressing promotions
- Large health warning notices
in stores about the dangers of alcohol and the recommended limits;
- A voluntary code to restrict promotions; and
- A ban on selling alcohol at below the cost of
the tax on it.
We questioned witnesses about these proposals, as
we describe below.
The supermarkets response
268. We received written submissions from supermarkets
and other retail organisations. We questioned four of the major
supermarkets about their promotion policies and proposals for
dealing with them. The supermarkets emphasised that there was
fierce competition for custom and, as a result, they did sell
alcohol at very low prices; however, they denied that this encouraged
people to drink more and rejected most of the proposed restrictions.
We were told that alcohol promotions were popular with customers
and were a product of a fiercely competitive market in which different
retailers were fighting for business and that
The prices that we are able to offer customers are
partly a response to each other's desire and need to attract more
market share, so that is where the prices come from.
269. The box below includes relevant parts of the
evidence session which show how intense competition leads to heavy
discounting, including at times selling at a price not only below
cost but below the level of tax.
|Q1134 Chairman: I find that very difficult to accept, even in part, on the basis of how supermarketsand I am not saying yours particularlydiscount it and how price promotions in our supermarkets are. If you walk in now you will trip over a three-for-two offer in most of mine. It must be price sensitive, must it not?
Mr Kelly: As we have all said, we are in a highly competitive market and customers like promotions. That is the reality.
Q1135 Chairman: That is, the price changes?
Mr Kelly: They will switch between brands of alcohol as they will switch between brands of supermarket.
Q1155 Sandra Gidley: Why do supermarkets sell alcohol at below the cost of the duty that is on it from time to time as a loss leader?
Mr Kelly: As we said earlier, we are in a highly competitive market competing for customers and we will sell sometimes loss leaders across a whole range.
Q1156 Sandra Gidley: Do you think it is right to do this with alcohol though? Do you think it is socially responsible?
Mr Kelly: We are in a highly competitive market. There is nothing that currently stops the floor continuing to fall away. There is a legitimate question there for policy makers about whether instruments need to be brought in to stop that happening.
Mr Fisher: It is not something that we make a habit of doing. We have done it twice in the last year.
Q1159 Sandra Gidley: So you do not feel the need to slash things as much as ASDA then, because from ASDA we have just heard that it is a commercial environment and that is why it is okay to do it?
Mr Grant: It is slightly circular, I guess, but we remain competitive so that we offer a universal appeal. We are not in Waitrose's position of being able to price to a very precise type of customer. We do have to cater for everyone from low, fixed income to the wealthy, and that is our mission as a commercial organisation, which means that we do have to very closely monitor what is happening in the market and make sure we remain competitive.
270. Sainsbury's denied that low prices were used to increase
the number of customers going to stores:
It is not to increase footfall. It is when the customer is there,
the first thing they see of the store is that "this is a
store which understands the sort of things I am going to be looking
for", and that includes discounts.
271. The supermarkets also denied that promotions led to 'increased
excessive consumption. Sainsbury's told us:
There is little or no recent research into off-trade alcohol promotion
sales which substantiates a clear link between the two. We believe
that the issue is much more complex and involves getting to the
crux of why people misuse alcohol in the first place. As a food
retailer, while our customers may buy alcohol on promotion, it
is overwhelmingly part of their weekly shop. Customer transaction
details show that just over 1 per cent of weekly transaction sales
Sainsbury's pointed to a survey in 2007 by Ipsos Mori
of its customers about their attitudes towards promotions on beer
which found that:
'One third said they would buy a little more than usual, with
nearly half saying they would buy 'about the same'
48% said they would check to see if the brand of
beer they like is on promotion and if not, they would still buy
their preferred brand
91% of customers said they would drink about the
same in a month when purchasing beer in bulk
Only 23% said they tend to choose a beer based on
Mr Beadles of the WSTA argued that 'the people who
are most likely to buy into promotional activities are ABC1 consumers
over the age of 45 and the people least likely to buy are DE consumers
under the age of 28'.
272. In answer to questions about new Scottish measures,
we were told that
the 10am threshold for alcohol purchases was most
likely to inconvenience pensioners who prefer to shop when stores
tend to be quieter and parents accustomed to shopping after completing
the school runrestricting alcohol sales to one aisle would
impose costs on supermarkets
but would increase sales (WSTA)
273. We were particularly interested in the effect
of restricting alcohol promotion to one aisle as the following
Mr Beadles: There is some quite interesting work
on this. Morrisons has 11 stores in the UK that for historical
reasons have got separate alcohol aisles and ASDA has provided
some data from Northern Ireland where they have separate alcohol
aisles. What we see within those sales is it increases the sale
of alcohol. We think the reason for that overall is that people
who have to go through a separate purchase experience stock up
more. They are inconvenienced by having to go through a separate
area and a separate till and, therefore, they stock up more as
a result of it. What we see less of is people putting a single
bottle of wine in the basket on the way through; what we see more
of is bulk purchasing when they go into the separate area 
Dr Stoate: That is completely at odds with the academic
research we heard this morning that was told to us by Sheffield
University which says if you have alcohol in a completely separate
aisle you see reductions in consumption by up to 40%. I find it
very difficult to see where you get your figures from.
274. However, it was too early to see what the effects
were in Scotland. Mr Grant told us:
In the nature of these experiments, we do not know
where it is going to end up with the results. The question was
asked before about what the effect in Scotland has been from selling
from the beer aisle, and so on, only. We will not know for a little
while, and I do not think the Scottish Government knows either
where it will end up.
275. We also questioned the supermarkets about the
use of large notices warning customers of the dangers of alcohol.
Waitrose told us that it already had them. We asked whether they
could be more powerful along the lines of "Alcohol can kill
you if you are not careful".
Mr Fisher told us:
We have spoken to customers in focus groups about
this particular issue and asked them what they want and what they
do not want. Frankly, I think if we come across as preaching like
that it is just going to switch people off. What we are trying
to do is a more subtle approach around education, thinking about
units, getting people to understand how many units they can consume,
what the hazardous levels are and where they are in relation to
that and, hopefully, addressing their behaviour. I genuinely believe
that if we put a sign up like that in store, it would not make
a lot of difference and I do not think it would engage.
276. We asked about the introduction of a voluntary
Q324 Sandra Gidley: Why do the supermarkets not adopt
a voluntary code on not piling them high and selling them cheap
at the store entrances when it comes to alcohol? You can actually
put the beer at the bottom of your trolley; it is not that difficult.
Mr Blood: The OFT has given us very clear guidance
on what we can and cannot agree within a voluntary code. Where
we can we have made those agreements. One of the issues that the
OFT has advised us on that we have to be very careful about in
a voluntary arrangement is the placing of promotional activities
within stores. It is a discussion that we have had and the OFT
has been very clear with us that there is a line and the placement
of promotional activities in stores is a competitive and commercial
issue and, therefore, a voluntary agreement on that at this moment
in time is something that they advise us not to step over.
277. In view of this response we called in the OFT
to give evidence, in particular the extent to which the OFT took
into account article 152 of the EC Treaty that 'a high level of
human health protection shall be ensured in the definition and
implementation of all the Union's policies and activities'? We
were told that the OFT
applies UK competition legislation which is derived
from EC treaty provisions. Article 152 does not directly apply
to implementation or the way in which competition legislation
is enforced. It would however be relevant if, for example, you
were looking at government measures taken on board at national
level, but in terms of the specifics of competition enforcement
article 152 is not directly relevant.
Ms Branch of the OFT added:
To a certain degree you could have trade association
guidance in principle on product placement if it did not have
an impact on the way in which they were competing. From our perspective
we need to ensure that the commercial independence and uncertainty
that need to be there to get efficient, competitive markets are
Robert Madelin, the head of the Health and Consumers
Directorate-General, European Commission, informed us that
in terms of internal market provisions, the Treaty
allows Member states to restrict free movement based on public
health grounds, provided that these restrictions are non-discriminatory
as the issue of voluntary agreements to restrict
the promotion of alcoholic products is concerned I tend to agree
with the OFT analysis that agreements between economic operators,
such as supermarkets and others, aimed at restricting the promotion
of alcoholic beverages would need to be assessed in terms of the
competition provisions of the EC Treaty, such as Article 81.
278. 73% of those surveyed in the RCN/RCP Survey
on Alcohol Treatment Services believed that the Government should
take action on the sale of low priced alcohol.
The main policy witnesses advocated to curtail the sale of cheap
alcohol and prevent supermarkets from using discounts as a way
of competing for custom was minimum pricing. Most of the big supermarkets
were opposed, but Tesco is in favour:
Our position for some time 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 that 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, those are not things, frustratingly, that the
industry can lead by themselves: those discussions have to be
led by government.
Conclusions and recommendations
recent decades an ever increasing percentage of alcohol has been
bought in supermarkets and other off-licence premises. Such purchases
exceed those made in pubs and clubs by a large margin. The increase
in off-licence purchases has been associated with the increasing
availability of, promotions of, and discounting of alcohol. Heavily
discounted and readily available alcohol has fuelled underage
drinking, led to the phenomenon of pre-loading where young people
drink at home before they go out and encouraged harmful drinking
by older people.
280. Some areas
have very large numbers of off-licences open for long hours. There
are also too many irresponsible off-licences. Addressing this
problem will require both better enforcement and improvements
to the licensing regime. A public health objective in the licensing
legislation would apply to off-licences as well as pubs and clubs
and could be used to place limits on the number of outlets in
an area. This aspect of the Scottish licensing legislation should
be closely monitored with a view to its implementation in England.
they acknowledged that alcohol was a dangerous commodity, supermarkets
told us that they used discounts and alcohol promotions because
they were engaged in fierce competition with each other. In some
cases, it is possible to buy alcohol for as little as 10p per
unit. At this price, the maximum weekly recommended 15 units for
a woman can be bought for £1.50p. This is not a responsible
approach to the sale of alcohol. Retail outlets should make greater
efforts to inform the public of the dangers of alcohol at the
point of sale.
282. The Scottish
Government has introduced controls on promotions including restricting
alcohol to one aisle. These measures should be instituted in England.
283. However, the main proposal for addressing aggressive
discounts was to introduce minimum pricing. We consider this in
the next chapter.
258 Q 17 Back
Q 82 Back
Q 354 Back
Q 104 Back
see Q 45 Back
Q 293 Back
Ev 116 Back
Ev 138 Back
Q 63 Back
Ev 139 Back
Ev 106 Back
Q 86 Back
Q 297 Back
Q 298 Back
Q 24 Back
Q 1103. The ACS told us: Currently multi-buys of small quantities
are used as footfall drivers into store. In fact alcohol is the
category most bought on promotion in convenience stores, which
means it is a significant footfall driver Back
Q 1214 Back
AL 21A Back
AL 21A Back
AL 21A. Sainsbury's claimed that 'the vast majority of our customers
take advantage of promotions to either trade up to higher cost
brands (particularly in the case of wine), or to stock up for
special occasions such as family birthdays and summer barbeques
period of time or with a wider group of family and friends Back
Q 328 Back
Sainsbury's is critical of the changes stating that "We trialled
some of the measures, including locating all alcohol in one area,
at our store in Cameron Toll [Edinburgh].The results suggest that
we will incur significant costs in order to comply with the changes.
It seems particularly unnecessary when it is at best questionable
what impact the changes in legislation will have on public health;
to an aisle only location for alcohol has led to an increase,
a burden, in terms of how you train staff, how you organise the
store, how you organise the point of sale, how you mark off various
areas. I did not want to overstate that burden, but I think that
there is a financial cost to organising the store differently Back
Q326 and see Q 1256 Back
Q 1256 Back
Q 1233 Back
Q 1234 Back
Q 582 Back
AL 71 Back
Ev 106 Back
Q 392 Back