Fifteen years of border relations

When the limits were raised on the levels of alcohol and tobacco people could import, all hell broke loose. Nigel Huddleston looks at how things have changed for the trade today

It's 15 years since the UK drinks trade first found itself at the mercy of the white van man.

When OLN broke the news, in February 1992, that a deal in Europe would raise permitted personal imports of alcohol to 90 litres of wine, 110 litres of beer and 10 litres of spirits, there was barely a blip on the trade's collective radar screens.

But 11 months later, when the limits became law, the issue became the hottest property the industry or this publication has ever had to deal with.

Within days, the docks at Dover were lined with Transits and Lutons waiting to embark for the drinks warehouses of Calais to fill up with booze and fags to sell in boot fairs and pub car parks.

Customs & Excise (as it then was) was caught on the hop and it quickly became apparent that illegal not-for-personal-consumption trade was going to be the real big issue.

It took only a month for the Tappit-Hen off-licence in Dymchurch, Kent, to cite cross-border trade as "the final nail in the coffin" before going out of business.

Across the Channel, opportunist entrepreneurs such as Dave West, of Eastenders cash and carry, became millionaires by legally supplying both legitimate shoppers and dodgy geezers.

After a slow start, Customs made 84 seizures of suspicious loads of goods coming off ferries at Dover in the first three months.

By Christmas 1993, Thresher was claiming to have lost £1 million in beer sales to cross-Channel trade, while Tesco put its total deficit at £35 million.

Pretty soon, major British retailers were taking an if-you-can't beat-'em-join-'em approach, and Victoria Wine (then with no connection to Thresher, which resisted the temptation), Tesco, Sainsbury's, ­Oddbins and Majestic all opened their own stores in the Calais environs. All bar Victoria Wine are still there.

By early 1994, Whitbread estimated that cross-Channel business was accounting for 15 per cent of all UK beer sales - one pint or bottle in seven.

When OLN visited the Carrefour hypermarket in Calais in 1993 it found armies of British shoppers shoving each other out of the way to get their hands on cases of stubby bottles of beer. With cases typically on sale at around £2.50 - less than half the UK price - and ferry companies offering regular bargain trips for £1, it was worth it both for legitimate day trippers and bootleggers.

A UK drinks trade that had virtually ignored that original OLN exclusive now held cross-border shoppers to be public enemy number one. If something wasn't done - to summarise the mood of the time - the trade would go to hell in a handcart.

Fifteen years down the line, that clearly hasn't happened. A lot of people did go out of business in subsequent years, some famous names among them, but the intervening years have also seen the resurgence of the independent regional wine merchant and the rise of the microbrewing movement to name but two positive phenomena in the UK trade.

So what went right? Why did the doomsday scenario fail to come to fruition? What has the long-term impact of Calais been on the UK trade? Is it still an issue worth worrying about? Is the white van man still alive?

OLN paid a return visit to Calais to find that, while the pile-it-high-sell-it-cheap philosophy was still at large, wine stores had become more sophisticated in competing for a slice of what is now a much smaller cake.

Some of the main players then and now share their views on how Calais and its impact on the UK have changed 15 years on.

It's changed a lot because it's superficial trade

Calais-born Nico Thiriot was the buyer for the town's Sainsbury's in 1992 and now works as a consultant, advising independent wine merchants

"It's changed a lot because it's superficial trade, a border trade. A lot of factors influenced trade: it could be as stupid as just bad weather, with people being unable or unwilling to cross the Channel. There were also my lovely colleagues in France striking every now and again which could affect trade directly for a week or two and put other people off coming in case they couldn't get back.

"Calais has been going down by 20 per cent a year for about seven years. Everything changed in 1999. Before that, the ferry companies were still operating some duty-free on board. People were a bit confused because the duty was so low and the prices were so cheap that Calais for them was duty-free, so when the on-board duty-free ended people thought the Calais business wasn't there any more, which wasn't true . The second thing that happened was that the transport companies had to increase their prices tremendously because duty-free was half of their income.

"When Wal-Mart came into the UK it hit prices everywhere . Suddenly you saw some very strong offers even on beer and spirits. A lot of prices were almost as low as they were in Calais.

"The tobacco duty increase in France was also a big influence. It went up by 40 per cent twice in one year. It meant people either didn't come or they went to Belgium where duty was still much lower.

"Low-cost flights were another reason. You can go to Spain or Latvia for peanuts and buy cigarettes very cheaply .

"When it reached 15 per cent of the whole UK business, that is completely, stupidly massive. Even though it's decreased by so much it's still maybe 5 per cent of the UK market. We did some natural cleansing of the Calais business. Some of the poor retailers had to close, but the good ones managed to survive."

Everything is harmonised except excise duty

Steve Perez was owner of Global Beer in 1992 when he ran a one-person campaign calling on the Treasury to harmonise duty. Today, he's managing director of Global Brands, the VK Vodka Kick supplier

"Cross-border shopping had a massive effect for me personally because my previous company went out of business in 1996 and that was one of the main contribut ing factors. A lot of people had to decide whether to change what they were doing or live with it. The reason we didn't survive was because at that time we were selling relatively high abv beers and they were the ones that were coming in on the white vans. One of the reasons we've subsequently done well is that RTDs, which we specialise in now, aren't widely sold in France.

"It's still having an impact because the industry has had to live with the introduction of strip stamps and if duty had been harmonised there'd have been no need for them. The likes of Maison Caurette and some other smaller importers went bust as a result and we've now got a market dominated by a couple of big beer wholesalers.

"We need to keep on complaining. Everything is harmonised in Europe except excise duty.

"Do I regret doing what I did? Not really. It was something we had to do at the time. If more people had really supported the campaign we might have been more successful, but too many people in the industry were just sticking their heads in the sand.

"It's still going on round the streets. You still see the men in white vans doing the rounds of the estates. They've even called to see me to try to sell stuff to me and I've got a warehouse full of alcohol!"

We're trying to appeal more to the local market

Olivier Versmisse is owner of Franglais, an upmarket wine warehouse on the outskirts of Calais

"My father used to have a farm across the road, but he was bought out to build the tunnel. The warehouse came on the market because the previous owners weren't able to pay a big tax bill. We had to start from nearly nothing because the suppliers had stopped doing business.

" They were doing tastings but, in our opinion, they weren't professional. One of the first things we decided to do was invest in a tasting bar and a Verre du Vin, which allows you to keep wines open for longer and prevents oxidation.

"It gives you quality control and it makes the image much more professional with customers.

"We're trying to appeal more to the local market. People coming in are astonished by what they see, because what they see from the outside is just a big concrete building.

"The British trade is still 85 to 90 per cent of all our business and the average spend is about E120-140. But whereas people were coming five times a year, they're now coming three, but they are buying a bit more."

A lot UK retailers have benefited

Jeremy Beadles is chief executive of the Wine & Spirit Trade Association, which led the assault on duty in 1992

"Cross-Channel shopping has obviously not been the death knell but it has put a lot of pressure on the industry and we have to accept that a certain percentage of sales come from people going across borders and perfectly legally bringing alcohol back for their own use. In the latest survey we did, in the third quarter of 2005, we estimated it was accounting for 11.8 per cent of the domestic market for sparkling wine, 7.1 per cent for still wine and 2.7 per cent for spirits.

"It has been in slow decline for a number of years but there are still enough people who see a big incentive to go to France for the day, and a lot of UK retailers have benefited with their presence on the far side of the Channel."

You've really got to reach out to people

In the 1900s, Chris Calver worked in marketing for the Port of Dover. He's now switched sides to become a marketing consultant advising French-owned wine merchants in Calais

"Retailers in Calais today have got to work a lot harder to make it happen. We use press advertising and have 96-sheet posters at the Eurotunnel terminal, and do offers like spend £50 and get six free bottles of Bordeaux.

"Ten years ago you could more or less open a shop and just wait for the customers to turn up. Now you've really got to reach out to people to make them come to you . All the places have tasting tables and they're very different to how they were back then.

"Price is still the main motivator. In UK supermarkets, you might see half a dozen wines on offer, but here the whole store is on offer.

"The white van market has declined . The disappearance of Hoverspeed was the greatest change because they used to like coming over on the hovercrafts.

"The stores I work with are targeting the local market and there's a cultural issue with the French in terms of the sort of place they like to buy their wine. There's a lot of quality stuff in there but they've still got 99p hock if that's what you're really coming for."

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