Further memorandum by Sainsbury's (AL
21A)
INTRODUCTION
We have been invited to give oral evidence to
the Health Select Committee on the 15 October, as part of
its inquiry into alcohol. Prior to the evidence session, the Committee
requested we submit a written memorandum on the topics below,
to supplement the written evidence we submitted in March (reference
HC 368-II). We welcome this opportunity and are happy to provide
any additional information on the areas covered in this memo,
in advance of the evidence session.
For context, the key statistics about Sainsbury's
(updated from our written submission to the Committee in March)
are:
— 792 stores, of which 290 are
convenience;
— 153,000 employees;
— over 18 million customers a week;
and
— 30,000 food and drink products (around
half of which are own-brand).
We are committed to driving positive behaviour
change, both within our company and with our customers. Our experience
shows us that change in consumer behaviour is most successful
when it is incentivised and focused on education, rather than
when change is imposed by regulation or restriction.
Health is at the heart of our business. One
of our Corporate Responsibility principles is to be the best for
food and health. Our goal is to offer our customers high quality,
healthy, affordable products and to allow them to make informed
and healthier choices. This includes alcohol. We have extensive
experience of providing information and products to ensure our
customers make healthier choices.
MINIMUM PRICING
While we understand the Committee's decision
to review the reasoning behind a form of minimum pricing, we believe
that minimum pricing is highly unlikely to reduce alcohol consumption
for a number of reasons:
Unintended consequences
A policy of minimum retail pricing is likely
to result in unintended consequences, which will undermine the
overall objective of reducing alcohol-related harm. The conclusion
(as suggested, for instance, by the Scottish Government) that
linking the product strength to the retail price would help reduce
alcohol consumption and thereby reduce alcohol-related harm is
unsound. Minimum pricing will only—disproportionately—those
households with lower or fixed incomes and may simply lead to
a shift in product choice rather than a reduction in consumption.
We believe that a policy of minimum pricing
could lead to increased cross-border "white-van" type
sales. In Northern Ireland, we have seen this cross-border shopping
in practice. Our Newry store regularly sees shoppers "commute"
from Dublin to Newry to do their weekly or monthly shop. As a
result our Newry store has the highest alcohol sales in the whole
of our UK estate.
Even taking into account shipping costs, there
is the real possibility of bulk internet overseas sales being
more attractive to British consumers if a minimum retail price
was introduced.
Evidence base/impacts
To date, there is no compelling evidence to
link the low price of alcohol with excessive consumption or crime
and disorder.
The Department of Health commissioned report
from the School of Health and Related Research (ScHARR), Sheffield
University, is frequently cited by Government officials in Westminster
and Holyrood as the evidence base that minimum pricing would deliver
significant reductions in alcohol consumption, particularly amongst
those in hazardous drinking groups.
However, the Centre for Economic and Business
Research (CEBR) has conducted a thorough analysis of the ScHARR
study and has identified shortcomings in its methodology and presentation.
The CEBR report suggested that:
"pricing legislation is unlikely to have
a significant impact on overall consumption levels of those drinkers
that it is intended to target, unless price increases are set
at very high levels, which would place an unfair burden on moderate
drinkers."[18]
Introducing any scheme of minimum pricing would
have a significant impact on our business and our customers. Therefore
there must be a clear evidence base and cost-benefit analysis
before the Government considers any policy based on this issue.
Introducing minimum pricing without an evidence base would be
disproportionate and not indicative of good policy making.
Cost to shoppers
In times of increasing pressures on household
budgets, we question whether it is appropriate to introduce minimum
pricing for alcohol. The assumption that this would divert customers'
spending to essential items is misleading, as our research shows
that even during this current pressure on household incomes and
general "credit crunch", our customers are buying the
same quantity but cheaper branded alternative alcohol.
At present, customers can shop around in order
to achieve best value for money. Minimum pricing would put a stop
to this and disproportionately penalise the majority of responsible
customers.
Higher alcohol prices would disproportionately
hit those customers on lower or fixed incomes. We would be surprised
if any stakeholders pushing for minimum pricing meant this group
to be targeted by these proposals.
Business impact
The introduction of minimum pricing for alcohol
in our stores would mean substantial costs to our business, requiring
us to add an extra level of complexity into our pricing systems.
It would also make it difficult for us to be competitive in an
increasingly tough trading environment.
We also believe that minimum pricing is anti-competitive
and sets a worrying precedent in terms of Government intervention
on price.
PROMOTIONS
We do not believe that increased purchasing
of alcohol directly impacts on increased excessive consumption.
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% of weekly
transaction sales are alcohol-only.
Our research also shows 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.
A survey in 2007 by Ipsos Mori of our customers
about their attitudes and buying behaviour towards promotions
on beer 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.
PLACEMENT IN
STORES
The majority of our alcohol products are already
stocked in a separate area in our stores. However, there are times
throughout the year when alcohol is stocked in other sections
of the store (such as the seasonal aisle)—during the lead
up to Valentine's Day or Christmas, for example.
As regards to the permanent layout of our stores,
the beers, wines and spirits aisle is generally located (depending
on the size of the store) between household and frozen goods and
opposite the grocery aisle. These aisles are at the opposite end
of the store to general merchandise goods (toys, homewares, electricals)
and clothing. In addition, promotional stacks or palettes may
be used. The majority of these are found at the front of store
or within the beers, wines and spirits aisle. Stores are encouraged
to position alcohol either in the beers, wines and spirits aisle
or at the front of store. However, positioning of alcohol is ultimately
at the store manager's discretion.
We feel it would be disproportionate to suggest
that all alcohol products, including seasonal and gifts, should
be placed in one area as these products are clearly targeted at
over 18s and could not be considered to link to binge drinking.
An unintended consequence of restricting the
sale of alcohol to specific parts of stores would be that it would
do little to "normalise" alcohol consumption. This proposal
separates alcohol out from other goods, therefore encouraging
alcohol to be consumed alone rather than in moderation with food
as part of a meal.
From September, significant changes to how alcohol
is sold came into effect in Scotland. We trialled some of the
measures, including locating all alcohol in one area, at our store
in Cameron Toll. 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.
RESPONSIBLE RETAIL
As a responsible retailer, we have devised and
implemented a number of polices to educate our customers about
alcohol at the point of sale. The Government needs to play a greater
role, however, in educating children, parents and adults in general
about the health effects and dangers of excessive drinking. While
we are happy to play our part in communicating to customers, the
Government should also consider how it can use education in schools
to reach children and parents and directly influence attitudes
and behaviours towards alcohol. While health is a devolved issue
in Northern Ireland, Scotland and Wales, we would like to see
consistency in the best practice that is promoted.
In January 2007, we became the first retailer
to adopt the Department of Health's guidelines on alcohol labelling
on our own-brand beers, wines and spirits. The labels, which include
recommended maximum daily intake information, are currently on
78% of our own-branded products. By the end of 2009, they will
be rolled out across all our own-branded alcohol range.
In July, we introduced a Think 25 policy
across all of our stores, in order to help tackle underage sales.
This builds on the Think 21 policy we introduced in September
2005. All employees are trained to check the age of anyone buying
alcohol if they look under 25. To coincide with the policy, we
also introduced in-store signage to ensure customers are aware
of the policy.
With research showing that fewer than half of
consumers are able to identify the recommended daily alcohol intake
for men and women, we are also committed to educating our consumers
about "unit" consumption.
In October 2008 we introduced a customer
friendly "alcohol education point of sale" in stores
in Scotland and Northern Ireland. The shelf-edge labels were designed
to help our customers easily understand how many units there are
in different alcoholic drinks, by providing practical information
and handy tips on units and measures. We are currently analysing
how our customers have responded to the initiative.
It is worth noting that a recently published
independent study by KPMG (sponsored by the Home Office) into
the effectiveness of the alcoholic drinks industry's Social Responsibility
Standards[19]
in contributing to a reduction in alcohol harm in England, found
good practice in the off trade, particularly in the supermarket
sector. The report praised the sector in particular for its policies
on restricting under age sales and in signage in highlighting
and enforcing the Think 21 policy.
Stakeholder partnerships also play a crucial
role in reaching out to the wider community. For example in September
2007, the Retail Alcohol Standard Group (which our Head of Legal
Services chairs) and Cambridge Trading Standards began a new initiative—a
Community Alcohol Partnership (CAP)—to reduce alcohol-related
community problems, which was trialled in St Neots. CAP brings
together retailers, the police, local authorities, secondary schools,
youth clubs and the local press to tackle under-age drinking through
education, enforcement and public perception. CAP is now operating
across the UK, including in Cambridge, the Isle of Wight, Kent
and Belfast and will be extended to other areas.
DRINKAWARE TRUST
We remain fully committed to the Drinkaware
Trust and its objective of positively changing public behaviour
and the national drinking culture to help reduce alcohol misuse
and minimise alcohol-related harm. Our Head of Legal Services,
Nick Grant, is a trustee on the Drinkaware Trust board. We were
one of the first retail companies to sign up to the Drinkaware
Trust.
We have contributed over £100,000 to
Drinkaware over the last two years and would like to see an adequately
resourced and sustainable future for Drinkaware. To this end,
we have been actively seeking to establish a sustainable funding
system for Drinkaware.
CONCLUSION
For any business, it is important to know that
the UK provides a business friendly environment and this is particularly
true during these challenging economic times. While we actively
support the Government in its aim of tackling problem drinking
in the UK, we believe that Government should work with retailers
on a voluntary basis. Where intervention is considered necessary
by Government, it should be made in line with the Hampton Principles
which state that regulators should recognise that a key element
of their activity should be to encourage economic progress and
only to intervene when there is a clear case for protection. We
do not believe that such a clear case exists for a number of the
proposals Government is considering as part of its strategy to
tackle excessive consumption of alcohol.
Furthermore, while we understand the motivation
and desire by the Government to implement policy objectives in
reducing alcohol-related harm, we believe that many of the proposals
may have significant unintended consequences. In some instances,
for example in the case of minimum pricing, proposals could penalise
the majority of responsible drinkers, and do nothing to make a
substantial long-term cultural change around alcohol abuse.
September 2009
18 Centre for Economic and Business Research report
"Minimum Alcohol Pricing: A targeted measure? "
(June 2009), page 4. Back
19
Standards set in 2005 for alcohol retail covering sensible
drinking messages, responsible marketing and ensuring that retailers
don't sell to the underage or intoxicated customers. Back
| 
