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Publication - Guidance

Implementation of minimum pricing for alcohol: guidance

Published: 20 Apr 2018

The guidance on the implementation of minimum unit pricing for alcohol is primarily for sellers of alcohol and enforcement authorities in Scotland.

28 page PDF

503.1 kB

28 page PDF

503.1 kB

Contents
Implementation of minimum pricing for alcohol: guidance
Section 3: Promotions

28 page PDF

503.1 kB

Section 3: Promotions

1. In relation to promotions, the retailer should bear in mind that the mandatory licence conditions prohibit irresponsible drinks promotions for licensed premises. Irresponsible drinks promotions are defined in paragraph 8, Schedule 3 and paragraph 7, Schedule 4 of the 2005 Act [12] . A "drinks promotion" means, in relation to any premises, any activity which promotes, or seeks to promote, the buying or consumption of any alcohol on the premises [13] .

2. Retailers run a variety of promotional, loyalty and discounting programmes, and it would be impossible to account for all of these within this guidance. Retailers should use their discretion when deciding whether a promotion that is not listed within this guidance is permitted.

3. As previously mentioned, it is ultimately the retailer's responsibility to be able to demonstrate that minimum pricing has been complied with. Where there is any doubt as to whether a promotion (voucher, coupon) complies with minimum pricing, the safest option would be to not apply the promotion. This should also be considered where numerous vouchers and coupons are offered.

4. Generally, vouchers and discounts that are clearly linked to a reward scheme or a refund are classed as cash equivalents so may be used as part (or full) payment for the alcoholic product. Vouchers and discounts which are not clearly linked to a reward scheme or a refund may not be used where the voucher or discount would take the cost of the alcoholic product below the minimum price.

5. In the following example, the purchase relates to 1 bottle of vodka and not a basket of goods:

Minimum unit price of a 700ml bottle of 37.5% vodka = £13.13

Price of vodka in store = £15

Scenario 1:

Customer buys vodka and uses 400 loyalty points (equivalent to £2) to take the price down to £13. This is permitted because loyalty points are 'earned' by spending a prescribed amount.

Scenario 2:

Customer buys vodka and uses a 'Brand Match' coupon to reduce the price. In principle a refund coupon being used against the purchase of alcohol which reduces the price is permitted. The minimum price of the vodka is £13.13, so no retailer can sell the vodka at less than this price. So, in this example where the selling price is £15, the maximum the 'Brand Match' coupon can be is £1.87 (£15 less £13.13) as the alcohol cannot be sold for less than £13.13.

Scenario 3:

Customer buys vodka and uses '£2 off when you spend £15' coupon to take the price down to £13. This is not permitted as the coupon is not directly linked to points accrual, and consumers cannot be reasonably expected to predict when those coupons would be available.

Reward cards

6. Reward points and vouchers can continue to be used to buy alcohol, either in the store where they were earned, or at partner retailers, on the condition that the points redeemed (and additional money paid, where applicable) have an equivalent cash value that is not below the minimum price of the alcoholic product.

For example, where a retailer sells a bottle of wine for £4.50 (minimum price for a 12% ABV, 750ml bottle of wine), it is permitted for a customer to pay for that wine either using points with a value of £4.50, or points with a value of up to £4.50 with the balance paid in cash.

7. Where a loyalty scheme means customers can collect vouchers as a reward for continued custom over a period of time, and those vouchers have a cash value, they will be considered as a cash payment. For example, if a supermarket runs a campaign where customers can exchange a series of receipts showing a minimum spend for a £10 voucher, that £10 voucher can be used to buy alcohol, in the same way that loyalty points and gift cards can be used. The price of the alcohol being purchased must not be below the minimum price.

8. The price of an alcoholic product is considered to be the amount of money paid by the purchaser at the time of sale. Proxy benefits to the customer from the sale, for instance in the form of reward points, should not be considered as a part of the purchase price, as they have a cash value only in respect of subsequent sales, and not the present one. For instance, if a promotional voucher is offered to customers for reward points in exchange for buying a particular alcoholic product, the value of the points shall not be taken into account when calculating whether the minimum price has been charged.

Discount / money off coupons

9. Businesses may continue to offer discount coupons for alcoholic drinks, but must ensure that the price of the product, after all applicable discounts are applied, does not fall below the minimum price of the product.

10. Where a coupon is offered to the public for a discount on alcohol alone or on a specific alcoholic product, retailers should ensure that the price of the alcoholic drink does not fall below the minimum price of the product after the discount has been applied. This applies whether the discount is offered by the retailer or the producer.

11. Where 'threshold spend' coupons are offered to customers ( e.g. save £2 when you spend £15), they may be used to purchase alcohol as long as the total cost of the sale is not below the minimum price for the alcoholic products. Where the basket of goods being purchased contains both alcoholic and non-alcoholic products, the discount coupon will be applied to the total cost of the basket. The discount coupon must not take the price of the alcoholic goods below the minimum price.

Multibuy promotions with non-alcoholic products

12. Where alcohol is supplied along with other products or services, for example, where a bottle of beer is packaged with and sold with a branded glass, or a bottle of wine is sold with food as part of a "meal deal", the lowest price of the promotion would be the minimum price that would apply to the alcohol if sold on its own.

Multipack products

13. Businesses can continue to sell bulk items of alcohol, such as multipacks of beer or ready-to-drink products. Businesses will need to ensure that multipacks are not sold below their minimum price. There are two ways of calculating the minimum price of a multipack depending on whether a single can is also sold. This is because there is already legislation which sets out the minimum price of packages containing more than one alcoholic product [14] , and where applicable that legislation has to be read alongside minimum unit pricing legislation. In practical terms, there is only a difference in the result of the calculation if the price per can has to be rounded. The following example illustrates this:

A business sells 24 x 440ml cans of 4.1% ABV lager in one multipack and also sells the same can individually, the calculation for minimum pricing purposes is:

Minimum price of 1 can is:

£0.50 x 4.1 x 0.440 = £0.91 (price rounded up from £0.902)

So the minimum price for a 24 pack would be:

24 x £0.91 = £21.84.

A business sells 24 x 440ml cans of 4.1% ABV lager in one multipack and does not sell the same can individually, the calculation for minimum pricing purposes is:

£0.50 x 4.1 x 0.440 x 24 = £21.65.

This next example does not result in a rounding per can:

A business sells 24 x 440ml cans of 4% ABV lager in one multipack and also sells the same can individually, the calculation for minimum pricing purposes is:

Minimum price of 1 can is:

£0.50 x 4 x 0.440 = £0.88.

So the minimum price for a 24 pack would be:

24 x £0.88 = £21.12.

A business sells 24 x 440ml cans of 4% ABV lager in one multipack and does not sell the same can individually, the calculation for minimum pricing purposes is:

£0.50 x 4 x 0.440 x 24 = £21.12.

Inclusive drinks

14. Licensed premises can continue to run promotions in hotels and restaurants (provided they are not classed as irresponsible promotions [15] ), for example a free bottle of champagne with a hotel room or a drink included in the price of a table meal. However the premises will need to ensure that the minimum price of the alcoholic product in question is included in the overall price of the promotion.

For example, where a pub offers a table meal with a pint (568ml) of 4% beer included in the price, the total cost of the table meal must not be below the minimum price of the beer ( i.e. £1.14).

Complimentary drinks

15. Free drinks provided on an ad hoc basis, for instance those offered as compensation for late food service or offered as part of in-store sampling, do not count as sales because the customer has not paid anything for the drink.


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