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Tesco willing to discuss alcohol price restrictions but government must lead to avoid competition concerns

Tesco

21 February 2008




Tesco has today told the Government that it is willing to take an active role in discussions around the introduction of legislation to ensure responsible pricing on alcohol and alcohol promotions.
But Britain's biggest supermarket warned that Ministers must initiate andlead these discussions to avoid retailers falling foul of competition legislation which prevents discussion of prices between businesses.
Tesco's Chief Executive, Sir Terry Leahy, has personally told the Prime Minister that Tesco would work with others in the industry as well as government experts and the police to tackle concern that lower-priced alcohol might influence anti-social behaviour. He also discussed a package of other measures to help tackle the growing problem of anti-social and underage drinking.
Urging Ministers to act, Executive Director for Corporate and Legal Affairs, Lucy Neville-Rolfe, said: "Binge drinking and other alcohol-related social problems are a serious concern to us all, but it is far too simplistic to apportion responsibility for this on price alone. If low-cost alcohol were the only factor then countries such as France and Spain, where prices are much lower than in the UK, would have similar problems and countries like Finland, where alcohol is expensive and its availability restricted, would not.
"However, supermarkets do sell a lot of alcohol and we accept that we have arole to play in addressing the problem of anti-social drinking. We need to better understand the impact of price and be mindful of the fact that the vast majority of people consume alcohol responsibly and shouldn't be penalised forthe actions of less responsible drinkers.
"To get this understanding and move forward all shops that sell alcohol need to act together – and this is where we are being held back by the law.
"Competition law prevents businesses discussing anything to do with price with each other and imposes severe penalties on anyone who breaches it. The current dispute over milk highlights how even independent decisions to hel paddress a wider societal problem can be misconstrued and result in responsible businesses being wrongly accused of price fixing.
“The only safe solution is for the Government to initiate and lead thesediscussions and to bring forward legislative proposals which Tesco and others inour industry can support. Such proposals would have to apply to all retailers ofalcohol otherwise they would be ineffective as those looking for cheap alcohol would simply shop with lower priced operators not covered by the legislation, undermining our business and achieving nothing.
"If Ministers act we pledge our support in helping to develop proposals andmake the legislation work."
Tesco's own experience through customer research and Clubcard data shows thatmost shoppers buy alcohol as part of the weekly family shop. It also reveals that after buying alcohol on promotion shoppers do not buy the same type ofalcohol again for a number of weeks which suggests that they use promotions to stock-up and not to drink more.
Tesco has already introduced a number of other measures to help encourage responsible drinking, including:
A 'Think 21' policy requiring our staff to check the age of all customers looking to buy alcohol. Anyone who looks under 21, as opposed to 18,and cannot provide appropriate identification, will not be sold alcohol in ourstores. This policy is backed by continuous training and support for store staff.
Tesco was the first supermarket to introduce labels showing the unitsof alcohol in its own brand alcohol. We will shortly begin rolling out the new Department of Health alcohol label. This will bring together the unit measurement for glass and bottle, the recommended maximum daily intake of alcohol units and agreed health messages. This will be rolled out to all own-brand lines by the end of this year and we will also be encouraging oursuppliers to adopt the label on branded drinks.
Lucy Neville-Rolfe also announced a number of other alcohol related initiatives and ideas that Tesco will develop with other stakeholders. These include:
Exercising a responsible approach to licensing hours. Tesco will take a flexible and responsible approach to licensing hours, not seeking licences in areas with known disorder issues and reviewing existing licences where evidence emerges that late-night alcohol sales are contributing to incidents of problem drinking.
Customer information. Tesco will build on its partnership with Diageo– providing customer information through point of sale, shelf-talkers and TescoTV about responsible drinking – to inform customers and help them make healthy and responsible choices in relation to alcohol. This will reinforce the Government's "Know your limits" consumer campaign.
Advertising. We believe the alcohol industry should lead a proactive strategy on responsible advertising. This might include taking forward the suggestion that one industry advert for every six be on responsible drinking and agreement not to advertise in the immediate proximity of schools.
Rolling out the St Neots Cambridgeshire Alcohol Project. The Tesco store in St Neots is at the heart of an ongoing initiative by the Retail Alcohol Standards Group to tackle underage drinking in the area. The St Neots pilot is a partnership between the off-trade, police, trading standards, schools and the local community to tackle underage drinking through a co-ordinated campaign targeted at young people. While the project is not yet fully evaluated, early evidence suggests it is reducing underage drinking. Tesco will take a lead role in replicating this model elsewhere in the country and is seeking partners around the UK to work with local stores to get further St Neots-style projects off the ground. We believe the successful rollout of the St Neots model depends on the level of support and co-ordination the Government is willing to offer and call upon Ministers to throw their weight behind such new projects.
Note to editors:
Media reports suggesting that Tesco has cut alcohol prices by significantly more than our competitors over the course of the past year are completely wrong, and are based on a selective and very limited basket of drinks compiled by asupplier of data to one of our main competitors.
In fact, a comprehensive survey of 354 lines stocked by Tesco, Asda and Sainsbury’s shows that the price of alcoholic drinks at both Tesco and Asda fell by 1% on average over the past year, while the price at Sainsbury’s rose by approximately 2%.

For more information please contact the Tesco Press Office on 01992 644645

Tesco is the UK's largest retailer and one of the world's leading international retailers. Tesco has around 5,000 stores worldwide, employing over 500,000 people in the 14 countries in which it operates. Our core purpose is to create value for customers to earn their lifetime loyalty. Our success depends on people: the people who shop with us and the people who work with us.