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26-03-2012, 11:24
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There’s a wonderfully splenetic attack on minimum alcohol pricing (http://www.adamsmith.org/blog/healthcare/200-proof-perfect-that-were-being-ruled-by-s) by Tim Worstall on the website of the Adam Smith Institute:

Minimum alcohol pricing is doing something that almost certainly shouldn't be done and then compounding the error by doing it in the most cackhanded way possible and illegally to boot. Just what is it that they teach in PPE these days?Thinking about it further, it’s clear that the biggest losers from this will be the producers and drinkers of cheap cider. Personally I won’t miss the 3-litre bottle of 5.3% stuff for £3.49 on the shelves of Tesco and ASDA, but if the price goes up to £6.36 then some poor sods will be out of a job, and some other poor sods deprived of a cheap soothing tipple.

And how much does scrumpy sell for at the farm gate in the West Country nowadays? Indeed, does the farmer even know how strong it is? If it’s 8%, a pint will cost £1.82, which I suspect is rather more than the current price.

There will be an interesting relationship between minimum price, duty and production cost, the precise implications of which are rather difficult to even guess at, and which may vary each time the duty escalator is applied.

Taking the post-budget duty rates, the current level of duty+VAT for one unit of alcohol for each product category is:

Spirits 32.2p
Beer (normal strength) 23.4p
Wine (13% ABV) 23.4p
Cider (5.3% ABV) 8.5p

(Wine and cider are taxed at a flat rate over the main strength band, not per unit of alcohol)

So, in a sense, there’s more “headroom” to build in production quality in cider than for any other drink.

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