Shops defy attempt to curb binge drinking

· Leak reveals bid to offset tax rise
· Supermarkets peg alcohol prices

• Gaby Hinsliff and Ben Quinn
• The Observer,
• Sunday March 23 2008

Shops are defying attempts by the government to clamp down on cheap alcohol and binge drinking, according to a leaked letter seen by The Observer

Alistair Darling, the Chancellor, raised taxes on beer, wine and spirits in his Budget following warnings from doctors that supermarkets and corner shops were selling drink too cheaply and irresponsibly. Rather than putting their prices up, however, stores are attempting to force suppliers to absorb the cost of the rise so that they can carry on aggressively price-cutting. Brewers which refuse to co-operate have been warned their contracts may not be renewed. Brewers pay the duty at source but would normally recoup the extra cost through the price they charge retailers.

A letter from one major off-licence chain to its suppliers, warns that the 'aggressive market we're all trading in' has put it under huge pressure. It says discounts in major supermarkets mean 'we are not confident the Budget will result in material increases in retail prices' or that the tax will be passed on to consumers. The letter from the Bargain Booze chain, which has 600 stores nationwide, continues: 'We will have to review the position of any brands where the retail ticket is increased in our business ... We regret to say that we cannot absorb the increases in costs that the Budget would seem to demand.' It asks suppliers to help 'by absorbing these increases within your own company'.
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