With the Budget only days away, I want to try to illustrate the imbalance in importance of the anti-duty fraud measures proposed by HMRC to two sectors whose interests are normally closely linked - wholesalers and brewers.
On one side wholesalers, led by the FWD, are continuing their longstanding campaign to get government to accept the damage that duty fraud on all alcohol products is doing to the UK economy in general, and the business of legitimate wholesalers in particular. On the other, brewers are fighting the introduction of more red tape in the form of duty stamps on beer and supply chain legislation.
To some degree, this gives the government an apparently balanced debate with their opposition to red tape countering their need to curtail revenue loss. What may be less obvious to casual observers is the relative importance to the two sectors of this issue. Most businesses instinctively and rightly fight government interference by lobbying. The FWD has become much better at this in recent years but we have to accept that the brewers are masters at this.
“There is clear evidence from spirits that duty stamps fight fraud”
As for the brewers, I believe this is one of a number of issues they will be trying to influence at any one time and part of the ebb and flow of debate. Duty stamps on beer would have a nuisance value to them, although as a letter to The Grocer on another topic on 2 February showed, “the cost of incorporating [change] into most existing flexible packaging designs is… insignificant”.
More importantly, while I believe those at the top in the brewers would condemn duty fraud, at the day-to-day level, sales keep the production lines running efficiently and there is little disincentive to supply anyone who wishes to buy their product.
For legitimate wholesalers, this has the potential to be an existential threat. Yes, every business must adapt to changing circumstances and if beer ceases to be an important market for legitimate reasons then we need to adapt. But I question whether we should accept without a massive fight the fact that this important market for wholesalers and independent retailers is being catastrophically affected by illegal activity.
There is clear evidence from spirits that duty stamps help fight duty fraud and from tobacco that supply chain legislation is an effective means of challenging supply to illegitimate customers.
Wholesalers will have to adapt to whatever is thrown at them and fairness is too often used as throwaway justification for complaint. But in this instance, these important pieces of legislation are essential to start to get a grip of this intractable and unacceptable problem.
Steve Parfett is chairman of AG Parfett & Sons