Alcohol - Health Committee Contents


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)[258]

"supermarkets are exhibiting the morality of a crack dealer" (Professor Plant)[259]

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 —  Beer2 —  Cider and perry —  Wine3 —  Spirits4 —  Alcopops —  Other5
—  Consumption within the home
—  1992

—  1993

—  1994

—  1995

—  1996

—  1997

—  1998

—  1999

—  2000

—  2001/02

—  2002/03

—  2003/04

—  2004/05

—  2005/06

—  20066

—  2007

—  527

—  536

—  552

—  627

—  656

—  653

—  645

—  640

—  725

—  735

—  726

—  792

—  763

—  739

—  760

—  772

—  298

—  297

—  311

—  338

—  351

—  365

—  340

—  329

—  388

—  386

—  380

—  416

—  395

—  377

—  393

—  384

—  47

—  44

—  52

—  77

—  82

—  58

—  61

—  60

—  58

—  55

—  50

—  64

—  55

—  52

—  59

—  75

—  152

—  164

—  162

—  180

—  188

—  196

—  212

—  213

—  232

—  236

—  239

—  251

—  261

—  262

—  255

—  263

—  30

—  32

—  28

—  32

—  34

—  32

—  30

—  35

—  37

—  39

—  39

—  41

—  38

—  38

—  41

—  42

—   0

—   0

—   0

—   0

—   0

—   2

—   1

—   4

—  10

—  18

—  18

—  19

—  14

—  11

—  12

—   8

—  -

—  -

—  -

—  -

—  -

—  -

—  -

—  -

—  -

—  -

—  -

—  -

—  -

—  -

—  -

—  -

—  Consumption outside the home7
—  2001/02

—  2002/03

—  2003/04

—  2004/05

—  2005/06

—  2006

—  2007

—  733

—  704

—  664

—  616

—  597

—  561

—  503

—  623

—  592

—  557

—  515

—  499

—  459

—  400

—  21

—  20

—  20

—  18

—  16

—  24

—  28

—  20

—  20

—  21

—  22

—  22

—  23

—  19

—  21

—  21

—  22

—  20

—  20

—  18

—  17

—  34

—  36

—  25

—  20

—  15

—  11

—   8

—  15

—  15

—  21

—  22

—  25

—  25

—  31

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 Food Survey

2. 'Beer' includes beers, lagers and continental beers

3. 'Wine' includes table wine, champagne and fortified wines

4. 'Spirits' includes spirits and mixer, liqueurs and cocktails

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.[260]

Professor Plant:

'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.[261]

257. Of particular concern to witnesses were

  • The increasing number of outlets; and
  • 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.[262] 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.[263]

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; and

crime and disorder in terms of shoplifting (eg alcohol) and robbery at the premises, or other criminal and anti-social behaviour.

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 still remain.[264]

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."[265]

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 prices.

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.[266]

The ACS added that its members had "well documented competition concern on below cost selling on all products, including alcohol."[267]

Criticisms

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.[268]

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.[269]

Solutions

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 ban…. Assuming …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.[270]

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 [271]

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."[272]

267. Other recommendations for addressing promotions included:

  • 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.[273]

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 supermarkets—and I am not saying yours particularly—discount 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.[274]

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 are alcohol-only.[275]

Sainsbury's pointed to a survey in 2007 by Ipsos Mori[276] 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 its strength'[277]

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'.[278]

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 run—restricting alcohol sales to one aisle would impose costs on supermarkets[279] but would increase sales (WSTA)

273. We were particularly interested in the effect of restricting alcohol promotion to one aisle as the following exchange indicate:

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 [280]

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.[281]

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.[282]

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".[283] 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.[284]

276. We asked about the introduction of a voluntary code:

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.[285]

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 not removed.[286]

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 and proportional…

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.[287]

Minimum pricing

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.[288] 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.[289]

Conclusions and recommendations

279. Over 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.

281. Although 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

259   Q 82 Back

260   Q 354 Back

261   Q 104 Back

262   see Q 45 Back

263   Q 293 Back

264   Ev 116 Back

265   Ev 138 Back

266   Q 63 Back

267   Ev 139 Back

268   Ev 106 Back

269   Q 86 Back

270   Q 297 Back

271   Q 298 Back

272   Q 24 Back

273   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

274   Q 1214 Back

275   AL 21A Back

276   AL 21A Back

277   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

278   Q 328 Back

279   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;

Q1206 Moving 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

280   Q326 and see Q 1256 Back

281   Q327 Back

282   Q 1256 Back

283   Q 1233 Back

284   Q 1234 Back

285   Q 582 Back

286   Q584 Back

287   AL 71 Back

288   Ev 106 Back

289   Q 392 Back


 
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