Implementation of minimum pricing for alcohol: guidance

Annex A: Frequently asked questions

Calculation of prices and updating

When will minimum pricing come into effect?

Subject to Parliamentary processes, the Scottish Government intends that minimum pricing will come into effect on 1 ^st May 2018. There will be no period of grace allowed for the implementation of minimum pricing.

How will prices be rounded? For example, if the minimum price of a bottle of spirits (700ml) with an ABV of 37.5% is £13.125, would the price be £13.12, rounding down, even if this is below the minimum price?

No, prices should always be rounded up to the nearest pence, so the minimum price of the bottle of spirits would be £13.13.

What products will minimum pricing apply to?

Minimum pricing will apply to all alcoholic products ^[22] with an ABV above 0.5%.

Labelling provisions only apply to alcoholic drinks with an ABV of over 1.2%. What ABV is to be used for alcoholic drinks at or below 1.2% ABV (and above 0.5% ABV)?

Although labelling provisions do not apply to alcoholic drinks between 0.5% and 1.2% ABV, low alcoholic drinks usually display the ABV, as the low alcoholic content is a key element in the appeal of the product.

Where an ABV is not on a label because the ABV is 1.2% or less, it is the responsibility of the licence holder to check the ABV that should be used in the calculation of the minimum price. This should be available from the producer. Where, in exceptional circumstances, the ABV is at or below 1.2% but the exact ABV is not able to be established, then a prudent approach should be taken and 1.2% should be used as the ABV for the calculation of the minimum price.

All alcohol above 1.2% ABV will show the ABV on the label as per the labelling requirements.

Will there be a change in labelling requirements ?

There is no requirement for producers to amend labels as part of the minimum pricing regulations.

Are retailers still able to sell pre-price marked products / flash packs?

Where licensed premises sell pre-price marked products / flash packs where the price is currently below the minimum price, they will need to decide how to deal with this stock before the implementation date.

If the price is changed on the pack (to be at least the minimum price), then it is essential that the price indicated to customers is clear and unambiguous and does not mislead consumers. Trading Standards advise that any price which no longer applies, including those on pre-priced marked products / flash packs, is completely removed or covered. The retailer will also need to ensure that all prices are changed e.g. shelf price, till price, so the consumer is not misled as regards the price of a product.

Another option is to stop selling any pre-price marked products / flash packs where the price is currently below the minimum price.

Does a delivery charge applied to an order affect the calculation for minimum pricing purposes?

No. It is the retail selling price of the alcoholic product being delivered that has to comply with minimum pricing. Any delivery charge is not relevant to the retail selling price of the alcoholic product. It is the licence holder's responsibility to ensure they are satisfied that the retail selling price of alcoholic products complies with minimum pricing.

What impact would duty and VAT rises have on the minimum price?

Duty and VAT levied on alcohol is separate and distinct from minimum pricing. The Minimum Price per Unit Order will state the minimum level at which alcohol can be sold. The calculation of duty and VAT should be calculated separately and will inform the final retail price. The final retail price must not be below the minimum price.

Does the Home Office ban on selling alcohol below the cost of duty plus VAT ^[23] apply in Scotland as well as minimum pricing?

No, the ban on selling alcohol below the cost of duty plus VAT does not apply in Scotland.

How might the proposed Deposit Return Scheme affect minimum pricing?

The minimum price is separate and distinct from the Scottish Government's proposals for a Deposit Return Scheme. As the Scheme is currently a proposal, it is not relevant for minimum pricing. The Alcohol (Minimum Pricing) (Scotland) Act 2012 states that alcohol must not be sold at a price below its minimum price.

How will minimum pricing affect retailers' obligations under the Grocery Suppliers' Code of Practice ( GSCOP) ^[24] ?

The price agreed between the supplier and the retailer for products is outside the Code, as is the price which retailers charge consumers. However, if the retailer believes that they need to vary a supply agreement to comply with new legislation, section 3(2)(a) of part 3 of the Code allows retailers to vary supply agreements retroactively to allow for circumstances outside their control.

To comply with section 3(3) of part 3 of the Code, the retailer must give the supplier reasonable notice of any variation. A change in minimum price may be a situation to which this part of the Code could apply.

Application and enforcement

How will minimum pricing be applied and how will it be enforced?

As a mandatory condition of a premises or occasional licence, minimum pricing is capable of being enforced in the same way as any other mandatory condition of a licence.

LSOs are responsible for ensuring that licence holders comply with the licence conditions and other requirements under the 2005 Act.

What information will LSOs need in order to check that minimum pricing has been complied with?

LSOs will need to know the selling prices of alcoholic products in order to check that the price complies with minimum pricing. Retailers can assist with this by having prices of products currently on sale to hand in whatever format is most convenient for the retailer. It is in the interests of retailers to assist LSOs in this as the responsibility lies with the licence holder to comply with minimum pricing.

You should bear in mind that clear pricing information is required to be provided to customers at all times in compliance with the Price Marking Order 2004. Advice on these requirements is available from your local Trading Standards office.

Will enforcement be proactive or reactive?

This will be for individual LSOs to decide.

How does minimum pricing affect cross border sales?

Minimum pricing applies to businesses selling alcohol in Scotland i.e. the sellers hold a Scottish premises licence. Minimum pricing does not apply in England. It is not illegal to purchase alcohol in England from licensed premises if this alcohol is for personal consumption. It is not illegal to purchase alcohol in England from licensed premises and then to sell this alcohol in Scotland from licensed premises.

It is illegal, however, to sell alcohol to the public without a premises licence - whether purchased from Scotland or England. This sort of activity will be monitored as part of the impact of minimum pricing. Police Scotland are aware of the potential for illegal activity and will monitor this.

Pricing

Do free drinks offered as compensation ( e.g. for a delayed meal) count as sales?

Free drinks offered on an ad hoc or impromptu basis, for example as compensation for poor service, do not count as sales because the customer has not paid anything for the drink. This is different to, for instance, 'meal deals' where the drink is offered as part of a package of goods.

Where a receipt shows an alcoholic drink at zero pence, does this count as a sale?

On the assumption that the alcohol is part of a sale with other goods (as opposed to being given away free) for example, a free drink with a meal, then paragraph 6A(2) of schedule 3 (and paragraph 5A(2) of schedule 4) of the 2005 Act is relevant: "where alcohol is supplied together with other products or services for a single price, sub paragraph 1 ( i.e. cannot sell alcohol below the minimum price) applies as if the alcohol were supplied on its own for that price." ^[25]

The total price charged for the other goods / services has to be at least the minimum price of the alcohol provided.

Can gift cards or gift vouchers be used to buy alcohol?

Yes, this is permitted, because they are treated as cash equivalents. The price of the alcohol being purchased must not be below the minimum price.

Does minimum pricing prevent retailers / producers from offering free tasting samples of alcohol?

No, minimum pricing will not apply to alcohol being offered for free as a tasting sample, as the Licensing (Scotland) Act 2005 applies only to the sale of alcohol.

How does minimum pricing affect customers who buy a ticket which includes the price of a meal and drink?

On the assumption that the alcohol is part of a sale with other goods (as opposed to being given away free) for example, a free drink with a meal, then paragraph 6A(2) of schedule 3 (and paragraph 5A(2)of schedule 4) of the 2005 Act is relevant: "where alcohol is supplied together with other products or services for a single price, sub paragraph 1 ( i.e. cannot sell alcohol below the minimum price) applies as if the alcohol were supplied on its own for that price."

The total price charged for the other goods / services has to be at least the minimum price of the alcohol provided.

How does minimum pricing affect retailers' / producers' ability to charge for tasting events?

Minimum pricing applies to the sale of alcohol. Whether minimum pricing applies to a tasting event may depend on how the tasting event is set up. If a price is paid for a ticket to attend the tasting event, it is likely that the samples being tasted will be offered free. In this case, minimum pricing will not apply as there is no sale of alcohol. Where there is any doubt as to whether minimum pricing applies, legal advice should be sought.

How does minimum pricing affect producers' ability to charge for distillery tours?

Minimum pricing applies to the sale of alcohol. Whether minimum pricing applies to alcohol served as part of a distillery tour may depend on how the distillery tour is set up. Distillery tours tend to operate on the basis of a charge for the tour itself with free samples offered. In this case, minimum pricing will not apply as there is no sale of alcohol. Where there is any doubt as to whether minimum pricing applies, legal advice should be sought.

If a retailer raffles a hamper which includes alcohol, does minimum pricing affect the price of the ticket?

If the alcoholic product included in a hamper has been provided free of charge, then it is not a sale and so minimum pricing would not apply. A similar situation would be where alcohol (in a sealed container for consumption off the premises) is offered as a prize.

A retailer operates a savings scheme whereby if a customer saves a certain amount of money, the retailer tops this amount up. So, for example, throughout the year the customer saves £28 in a savings scheme with the retailer and, at a point in the year, the retailer makes this up to £30. Can this be used to pay for alcohol that has a minimum price of £30?

This is a similar scenario to a reward scheme. The additional £2 is classed as a cash equivalent so may be used as part (or full) payment for the alcoholic product.

Can retailers still offer partial refunds for faults that are not apparent at the time of sale?

Where a partial refund is made subsequent to the purchase due to faulty goods, the buyer may be entitled to a refund as a matter of law, and this is acceptable as a defence should the refund take the price below the minimum price. If the seller wishes to go beyond the legal requirement for a refund, and if the refund would take the price below the minimum price, it should be clear on the facts of the case that the refund is for poor service or damaged stock, and the reason for the refund must have only become apparent after the sale took place.

How does minimum pricing affect the sale of damaged stock?

Damaged stock can still be sold at a reduced price provided the reduced price is not below the minimum price. Minimum pricing is a mandatory condition of a premises licence and stipulates that alcohol must not be sold on the premises at a price below its minimum price. There are no exceptions to this.