Summit to define ‘below cost’

25 June, 2010

Leading figures from the world of drinks retailing were due to attend a meeting at the Home Office yesterday (Thursday) to debate below-cost drinks sales.

The government has pledged to ban loss-leaders as part of the Police Reform & Social Responsibility Bill, announced in the Queen’s speech.

But disagreement remains about how cost should be defined. The WSTA argues it should mean duty and VAT, while the Federation of Wholesale Distributors and the British Beer & Pub Association maintain the cost definition should include at least some of the production costs – though not necessarily the full invoice price paid by the retailer.

Retailers invited to yesterday’s 90-?minute meeting include the Co-op, Direct Wines, Marks & Spencer, Sainsbury’s, Tesco, Waitrose, Morrisons, Musgrave, Spar, Aldi and Bargain Booze.

Suppliers scheduled to attend include Berry Bros & Rudd, Foster’s, Gallo, Heineken UK, Beverage Brands, Brown-Forman, Chivas and Constellation.

Morrisons called on the government to ban the sale of alcohol for less than the combined cost of duty and VAT and Tesco has said it would support such a move.

Morrisons wrote to Home Secretary Theresa May, saying it would support a change in the law and a £25,000 fine for those selling drinks below cost.

Director of corporate affairs Richard Taylor said: “Having considered the arguments thoroughly, Morrisons believes the best way for the government to intervene is to introduce a compulsory ban on off-licence sales of alcoholic beverages below the rate of duty and VAT.”

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