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Every little helps profits

Douglas Fraser | 18:03 UK time, Friday, 21 May 2010

Britain's biggest retailer has been listening to its customers, and a clear majority are concerned about Britain's big bad booze habit.

So Tesco has joined the Scottish government in support of either an end to selling below wholesale cost price or perhaps a minimum pricing of alcohol. This breaks ranks with the other big retailers, and no doubt infuriates the distillers and most brewers who have been fighting the move.

It's a big gesture in the direction of taking responsibility for health and community safety, isn't it?

Well, there may be more to it than that.

A big retailer such as Tesco buys its booze at wholesale prices, of course, and these are, as you'd expect, lower than the retail price.
That's unless they're loss leaders, used to draw people in to buy other goods at a profit.

There's no plan to increase the wholesale price being paid.

So if there is to be no more loss leading, or if a minimum price per unit of alcohol is to be imposed, then the retail price will rise.
The difference between the current retail price and the future retail price looks like clear profit for the retailer.

You'll notice that Tesco doesn't seem to be so keen on raising tax, which would be the other way of using higher prices to reduce consumption. And with George Osborne looking at a gigantic government deficit, alcohol tax is unlikely to escape the Chancellor's attention.

So call me cynical, but perhaps it's no wonder Tesco has discovered its social conscience and listened to its customers.

Comments

  • Comment number 1.

    Personally, I don't mind WHY Tesco has seen the light, and those whose lives are saved (literally and metaphorically) shouldn't, either.

    It's not as if it's going to be one law for Tesco, and another for all other retailers.

    Adn as for "clear profit for the retailer", Tesco DOES pay taxes!

  • Comment number 2.

    Try asking anyone in public health Douglas?
    Perhaps they welcome this Tesco gesture?
    You must know someone impartial - perhaps an ex-DCMO?
    Your cynicism may be politically partial?
    Or perhaps you think I am being cynical?
    Slainte Mhor

  • Comment number 3.

    Funnily enough, the same thought had crossed my mind regarding Tesco's profit margins. The price point at which alcohol consumption would be curtailed is far above any level that a government would dare to introduce. One must remember that beer at £4, or more, a pint is consumed in vast amounts in clubs every weekend.

    Personally, I feel that the relatively inactive police service should start doing their job, and putting the drunkards in court on a Monday morning.

  • Comment number 4.

    Which customers would want to pay more for their booze? Did Tesco's have a customer questionnare on the subject? If the powers that be want to do something radical to reduce the impact of binge/underage drinking they want to bite the bullet and rein in the opening hours of drinking establishments and have a complete ban on the consumption of alcohol in public places,zero tolerance should be the order of the day.

  • Comment number 5.

    Rember Prohabition in the US the greatest boost to organised Crime.
    Winston C was on a bottle of Brandy a night and lived to 92
    Bannish Stress Evilness Stupidity which will be next Alcohol abuse is pernicese(wrong selling)bad but has underlying reasons.
    I'm a drunk I WISH it would KILL me but No would notice except the Accountants Pete

  • Comment number 6.

    The message of this blog seems to be 'A business wants to make more money and has backed a scheme that will enable them to do so'. Why do people find this surprising or scandalous or underhanded of Tesco? Every company is here to do the same thing.
    Sainsbury's have facilities to recycle plastic bags, which is good for the environment but is also good for their profit and loss sheets because they don't have to produce new bags made of expensive oil-based plastic.
    Asda claim that all of their new stores will use 30% less energy and greenhouse gases. This will not only help global warming, it will also reduce Asda's electricity bill.
    Companies such as Tesco will always introduce new ideas that they claim are for the greater good but are really just money-making schemes. If the side effects of these reduce global warming, lessen the amount of oil being drilled or lower the number of drunks roaming our streets, then surely it has to be a good thing?

  • Comment number 7.

    What does it really matter what price is charged for booze, the numpties rolling about the street at night couldn't care less; they have reached the pinnacle of their achievement. The people who don't addle their brains with booze couldn't care less, it doesn't affect them, except for the fact they have to subsidise health care for the jaikies and pay for policing them out of their taxes. Meantime the booze manufacturers continue to make a fortune from the numpties, they couldn't care less either.

  • Comment number 8.

    At what point does raising the price of supermarket alcohol actually help society? The underage drinkers wont stop stealing/getting alcohol from their parents because of a price per unit on alcohol, alcoholics, by definition are unlikely to be swayed by price. The rich wont notice it either, the biggest losers here are the low-middle income people who enjoy a drink.
    To showcase the ridiculous nature of the price fix, I propose introducing a new minimum price per calorie on food stuffs, the NHS has a battle against obesity and the sale of butter, chocolate and microwave dinners must be curbed. As lager people may drive where others might walk, society would be saved from thousands of wasted car journeys.
    Ridiculous.
    There are two reasons for alcohol price fixing, increasing government red tape and profit

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