The launch of the government’s Alcohol Strategy - and the publicity around a possible minimum pricing regime - has generated lots of speculation about which products might fall foul of the proposed 40p-per-unit minimum price.
Spirits are widely considered the alcoholic drinks category that would be most vulnerable to minimum pricing, especially own-label products.
But how many spirits products were actually being sold below 40p per unit in the week immediately following the Budget?
The results are surprising. Our analysis shows the retailer stocking the greatest number of SKUs selling at less than 40p per unit was Morrisons. With eight SKUs below the 40p-per-unit limit out of a total of 53 products in our sample, 15% of its spirits range would have fallen foul of the new proposed minimum price.
By contrast, just 3% of Tesco’s and Asda’s spirits ranges were on sale for less than 40p per unit, and 9% of Sainsbury’s range. It appears different retailers have chosen to focus their deepest cuts in different categories - at 19, Tesco was the retailer with the most cider and lager SKUs below 40p per unit, while Asda led on wine, offering nine SKUs for less than 40p per unit.
It’s a tale of two countries in the beef market at the moment - whereas wholesale prices for UK beef continue to climb and, at £3,080/tonne, are up 27.3% year-on-year, Brazilian beef has slumped by 16.2% in the past year, with prices falling by 10% in the past month.
Brazilian beef prices have fallen partly because the country is expected to boost its inventories by 3% this year, with greater supplies depressing prices.
In addition, Russia is believed to be reducing the number of Brazilian beef plants certified to export beef there, as it drives up hygiene standards.
Despite reductions in herd size, attractive export markets and ongoing concerns about the Schmallenberg virus, UK lamb prices have stayed largely stable over the past year. At £4,586/tonne, prices are currently down by 0.1% year-on-year. New Zealand lamb has continued to nudge up and is now 3.3% more expensive than this time last year.
As for branded versus own label, our sample shows a far greater proportion of own-label than branded products would fall below minimum pricing levels - 39% of the own-label products we surveyed were selling at less than 40p per unit compared with just 6% of branded SKUs.
Within own label, there was an even split between gin and vodka products below 40p per unit - we found seven of each - and three white rum products. There was no own-label Scotch whisky in our sample at less than 40p per unit.
On the branded side, we found three brands selling at less than 40p per unit - Glen’s vodka, which was on sale for £13.29 for one litre in Morrisons but would cost £15 under a minimum pricing regime, High Commissioner (one litre for £14.19 in Morrisons versus a minimum price of £16, and Bell’s, which was on sale at £11 for a 70cl bottle in The Co-op and would cost £11.20 under minimum pricing.
Minimum pricing would clearly affect some of the key promotions that supermarkets include within their marketing programmes. However, our pricing analysis also shows just how different the selling prices of the leading spirits brands within the major supermarkets are. For example, the 70cl bottle of Bell’s selling in the Co-op at £11 was just below the minimum price of £11.20 (ie 70cl x 40% x 40p) but it was 33% cheaper than the same bottle selling in Sainsbury’s at £16.29.
Despite the potential introduction of minimum pricing, we expect these differences to remain - heavy promotional activity will continue, meaning retailers will still able to offer eyewatering deals on many spirits brands. To take the Bell’s example, Sainsbury’s would be able to reduce the price of Bell’s by over 30% and still sell above 40p per unit.
The message that many wily shoppers will take from this is that, even with minimum pricing in place, it pays to wait for your favourite brand to be promoted and switch retailer, if necessary.