The European Court of Justice's ruling on the validity of a minimum unit price for alcohol is very timely, coming as it does at the highest point for sales of alcohol over the festive period.
The legislation to bring in a minimum price of 50 pence per unit of alcohol in Scotland was passed by the Scottish Parliament in May 2012. An initial challenge by the Scotch Whisky Association was initially rejected by the Scottish Courts in 2013, but following an appeal the question of whether a minimum unit price would be contrary to EU law was referred by the Scottish Appeal Court to the European Court for this opinion.
The European Court of Justice has now ruled that the effect of the intended Scottish legislation would be significantly to restrict the market, which could be avoided by introduction of a tax measure designed to increase the price of alcohol instead of a measure imposing a minimum price per unit of alcohol. However, the court has stated that it is ultimately for the national court to decide whether alternative measures, such as increased taxation on alcohol, are capable of protecting human life and health as effectively as the current legislation, while being less restrictive of trade on those products within the European Union.
It now appears to be accepted by all parties that the imposition of a minimum unit price can be seen as restrictive of trade, and the only question therefore remains is whether to rely on the exemption that legislative steps may be taken where they would be to protect human life and health, if appropriate. The Scottish Government's stance clearly being that it is, given the significant health issues which arise from alcohol consumption in Scotland.
What does this mean for our whisky industry?
While the Scotch Whisky Association is leading the challenge, this should be seen as a point of principle rather than a practical objection. The legislation, if implemented, would mean that, for example, a 70cl bottle of whisky could not be sold for less than £14. While this would significantly increase the cost of supermarket own-label and other blended whiskies, most malt whiskies already sell for significantly higher prices, and so, in practice, would not be affected by the new pricing requirements.
Malt whisky is, clearly, one of Scotland's most significant exports and, indeed, to some extent is the flagship of all that is stated to be good about Scotland – the key export markets for Scotland's food and drink producers are not mass-production sales but niche and specialised products, emphasising the natural and locally-sourced ingredients of the products.
Whatever the outcome of the final decision of the Scottish Courts taking account of an EU ruling, as Scotland’s Year of Food and Drink comes to a close, Scotland's premium whisky producers are unlikely to be affected.
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Scott Kerr is head of Harper Macleod's Food and Drink Group. If you wish to discuss anything mentioned is this article, please contact us.