U.K. Drinks Industry Should Curb Pricing, Majestic Chief Says

Majestic Wine Plc Chief Executive Officer Steve Lewis said U.K. retailers are acting irresponsibly by offering discounts on alcohol as concern mounts that cheap booze promotions are fueling Britain’s drinking culture.

The CEO said formal attempts to ban the sale of alcohol at below cost are unlikely to succeed. “I don’t think there’s any appetite for minimum pricing in the industry,” he said in a telephone interview today.

Public pressure to tackle excessive drinking is growing, with violent crime fueled by alcohol costing the nation as much as 13 billion pounds ($21 billion) a year, the Home Office estimates. Alcohol consumption has risen 40 percent in England since 1970 to the equivalent of 120 bottles of wine a year per adult, according to the U.K.’s chief medical officer. The new government is reviewing alcohol taxation and pricing.

“Some of the pricing activity taking place in U.K. retailers at the moment is highly irresponsible,” said Lewis, an executive board member of The Wine and Spirit Trade Association. “Some of the prices on beer and spirits are highly irresponsible and they are not good for the industry. They bring down critical attention on the industry.”

Little more than half the alcohol drunk in the U.K. is now consumed in pubs, down from 88 percent in 1979, as supermarkets can offer heavily discounted deals, known as loss-leaders. In 2009, 40 pubs a week closed, according to the British Beer and Pub Association.

“Majestic just don’t go in there, we’re not into loss-leading spirits and beers,” Lewis said.

Price Controls

U.K. Prime Minister David Cameron backs plans for local councils to impose a minimum price for alcohol, according to an August interview with the Manchester Evening News newspaper.

The newspaper quoted Cameron as saying that he was “very supportive” of proposals by councils in Greater Manchester to make it illegal for pubs and shops to sell alcohol for less than 50 pence a unit within their boundaries.

“It’s only right and proper that the government requires the industry to act in a more responsible way,” Lewis said. “I don’t take any great enjoyment about being part of an industry unless that industry is prepared to act in a responsible way.”

In May, Tesco Plc, the largest U.K. retailer, said it would support any government plan to introduce a minimum price on beers, wine, ciders and spirits, should lawmakers proceed with such a measure.

‘Lost Opportunity’

Last week, Scottish lawmakers rejected a plan to impose a minimum price on alcoholic drinks in a vote that the British Medical Association in Scotland called a “lost opportunity” to improve the nation’s health.

The minority Scottish National Party government proposed to ban the sale of alcohol under 45 pence a unit. The bill was opposed 76 to 49, with four uncast ballots.

The proposal would have resulted in a minimum price of

12.60 pounds for a 70-centiliter (24-ounce) bottle of Scotch whisky, up from an average price of 10.85 pounds in Scotland, according to the Scotch Whisky Association.

Majestic reported an 18 percent increase in first-half profit as it added more customers. Net income advanced to 5.1 million pounds for the 26 weeks to Sept. 27, from 4.3 million pounds a year earlier, it said today in a statement.

The company last year lowered its minimum purchase requirement to six bottles from 12.

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