On October 1st, new legal measures on the sale of alcohol came into force in Scotland. Consumers and retailers now have to adjust to legislation that bans multi-buy discounts, places strict limitations on the promotion of alcohol in and around stores, and imposes a ‘Challenge 25′ age verification policy as a minimum. The measures in the Alcohol etc. (Scotland) Act 2010 set up some sharp cross-border differences between Scotland and England, and pave the way for further controversial changes.

Multiple wine bottles

Case discounts? - think again

Political discussion and press coverage have largely concentrated on the issue of minimum pricing in Scotland, so the wide ranging provisions of this Act have largely escaped public attention. John Drummond, Chief Executive of the Scottish Grocers’ Federation (SGF), says that the Scottish Government has done little to raise public awareness of the changes: “I think that on October 2nd customers will get a real surprise when they come in expecting to pick up their usual, and they won’t be able to get, for example, their 3 for £10 deal.”

The largest retailers are also worried. A Morrisons spokesman says: “Colleagues in store will be spending a lot of their time for the first few weeks simply explaining why customers can’t get quite the same deals in Scotland that they can everywhere else.”

The main change in the legislation is a ban on quantity discounts. BOGOF (Buy One Get One Free) deals, and 3 for 2 offers on alcohol are banned, and if a store sells a bottle or can of beer for £1.00, then a 6 pack of the same beer must be sold for no less than £6.00. However, there are anomalies in the legislation, so if the retailer doesn’t sell individual bottles or cans, then there are no restrictions on the pricing of quantity purchases. Likewise, if a store sells single 568ml cans of a beer, they could still offer discounts on multipacks of 500ml cans. As a result, some retailers are now looking at range adjustments to respond to the new rules.

When minimum pricing does come in, as it is expected to do, next year, some of the anomalies in the new legislation will be closed off – so selling individual bottles of wine for £3.33, just so you can still offer 3 bottles for £10, will cease to be an option.

Majestic Wine offers multibuy discounts as a key part of its business plan, and in response to the new legislation the company has opted for a solution that actually sees Scottish customers getting a better deal than their neighbours south of the border. Scottish shoppers now pay the multibuy discount price on a wine even if they purchase a single bottle.

Scottish shoppers now pay the multibuy discount price on a wine even if they purchase a single bottle.

Online, the company are basing its offers on the delivery postcode of the customer to reflect the changes in the law. Majestic says:  “We are continuing to offer the same service and the same price to our Scottish customers, but the mechanics involved have changed.”

The differential between Scotland and the rest of the UK comes sharply into focus in online sales. Retailers who deliver from warehouses in Scotland are covered by the new legislation, but those who ship from across the border are still able to offer case discounts and other multibuy offers. This puts companies like Edinburgh-based L’Art du Vin at a competitive disadvantage. Director Richard Bouglet said: “This has huge implications for us as we are selling online to customers in Scotland and to other parts of the UK. As licence holders, we have received no communication or guidance about these changes. We will of course comply, and find a way of being fair to both our Scottish and English customers.”

As a ‘bricks and mortar’ retailer, Morrisons also acknowledges that the changes have forced some major reforms to the way the company operates. The spokesman said: “We will now need to have a separate structure for charging in Scotland than we have in England and Wales. This has taken a lot of work and a system change has been necessary to accommodate it. At Morrisons, we’ve always been proud of our single price file. We have had to make big changes to comply with the law whilst offering our customers the value they expect across the store.”

Tesco also says it’s “working hard to implement the changes required for October”, and adds that the company  “will be monitoring closely the impacts that these changes have”.

As well as the ban on multiple discounts, the new law also places tight restrictions on the ‘irresponsible promotion’ of alcohol, and new restrictions mean that no advertising of alcohol will be allowed within 200 metres of a store. Even a delivery van carrying a promotion connected with that premises will not be allowed within 200 metres.

no advertising of alcohol will be allowed within 200 metres of a store. Even a delivery van carrying a promotion connected with that premises will not be allowed within 200 metres.

However, grey areas in the legislation mean that licensees are potentially open to unfavourable interpretations of the law by local Licensing Boards. Window vinyls displaying images of alcoholic drinks as a part of the store’s range of products may be deemed to be promoting alcohol and banned. Likewise, ‘meal deals’ containing a bottle of wine are still allowed under the new law, but it will be at the discretion of Licensing Boards to decide if in-store advertising of these deals constitutes irresponsible promotion.

Licensing solicitor John Batters, with thirty years experience in Scottish licensing law, says the legislation has been poorly drafted, and that different Licensing Boards are bound to make different rulings: “There is tremendous scope for confusion over the new rules. Unfortunately, licensing legislation also makes it difficult for licensees to appeal decisions of Licensing Boards. There are also considerations of cost: an appeal in the Sheriff Court would cost several thousand pounds. The result is that most smaller operators cannot afford to appeal and even very large companies are reluctant.”

Lawyers and industry figures are united in recognising that adapting to this new law is going to be a  bumpy ride.

 

What the new law means:

Multiple purchase:

  • No discounts allowed on the bulk purchase of cans or bottles that you also sell singly – if you sell one can for £1, you must sell four cans for no less than £4.
  • If you only sell single cans of 568ml., then you can still discount multipacks of 500ml. cans
  • Alcohol supplied free, or at a reduced price, is not allowed, so no BOGOF and ‘3 for 2’ deals
  • Discounting of single bottles or cans is still allowed. Any price change must be made before 10am and must last at least 72 hours.

 

Online purchase:

  • If drinks are despatched from a warehouse in Scotland, then the new law applies.
  • Retailers based outside Scotland will still be able to offer ‘by the case’ discounts on delivery to Scottish customers.

 

Promotions:

  • Anything  which ‘promotes, or seeks to promote, the buying of any alcohol sold on the premises’ can now only be displayed within the store’s designated ‘alcohol display area’.
  • Window graphics stating that beer, wines and spirits are ‘sold here’ may constitute a promotion in the eyes of individual Licensing Boards.
  • Any advertisement which advertises alcohol ‘solely or primarily’ is not allowed within 200 metres of a store.
  • If a delivery van is displaying a drinks promotion in connection with the premises, then it will not be allowed within 200 metres of the boundary premises.
  • Exemptions are in place for promotions over which you have no control

 

Promotions combining food and alcohol:

  • If an alcoholic product is packaged with a non-alcoholic product, like a wine and cheese gift pack, the new law does not apply, and the price can be discounted.
  • ‘Meal deals’ that offer alcohol as part of the deal are not specifically banned. However, it will be at the discretion of Licensing Boards to decide if in-store advertising of these deals constitutes irresponsible promotion.

 

Age verification Policy:

  • From October 1st, retailers must adopt a ‘Challenge 25’ age verification policy as a minimum standard. Licence holders are advised to have this policy in writing and available to staff.

 

Source:  The Scottish Government’s ‘Guidance for Licensing Boards’, and the Scottish Grocers’ Federation.

 

This is a slightly edited version of an article first published in Off Licence News.