Asda makes commitment to end cut-price alcohol deals

Asda has become the first supermarket chain to end below-cost alcohol deals, it said today.

The supermarket has introduced a policy not to sell alcohol below the cost of duty plus VAT in all its stores.

Chief executive Andy Clarke outlined the move in a letter to Home Secretary Theresa May, saying it was a "first step" towards a new way of selling alcohol in the UK.

The policy took effect on Tuesday and ensures a one-litre bottle of Smirnoff vodka will never cost less than £10.49 and a pack of 20 Carling lagers will not be priced below £7.17.

Mr Clarke said in his letter: "We accept that the way in which alcohol is sold to the public needs to change and I welcome the high priority given by the new coalition Government to tackling alcohol misuse by working with business.

"I am writing to you to call for the establishment of a floor price for alcohol below which it would be illegal to sell.

"But words count for nothing without actions to back them up, so from today (July 20 2010) it will be Asda's policy in all our stores not to sell alcohol to the public below the cost of duty plus VAT.

"I see this as a small but important first step in the process towards creating a new way of selling alcohol in the UK."

He said the policy would apply to "99% of the alcohol we sell", with store managers retaining the right to set prices for damaged or end of range products.

Mr Clarke continued: "I believe that a ban on selling below a floor price of duty plus VAT would raise the price of the cheapest alcohol deals and promotions and give Government the lever to ensure that increases in tax are passed on to consumers.

"It would not penalise the vast majority of customers who drink responsibly. Importantly in the current economic climate the beneficiary of higher prices would be the public purse with funds available to tackle alcohol misuse rather than accruing to the drinks industry as would be the case with minimum pricing."

Asda's decision comes two months after Tesco chief Sir Terry Leahy backed a call for minimum pricing.

Former chief medical officer Sir Liam Donaldson backed a 50p minimum price for a unit of alcohol.

He clashed with former prime minister Gordon Brown on the issue after Mr Brown said he did not want to penalise the sensible majority of drinkers.

The British Medical Association (BMA) has a strong stance on alcohol, and supports a complete ban on advertising as well as minimum price per unit.

In June, the National Institute for Health and Clinical Excellence (Nice) called for minimum pricing, with backing from the Faculty of Public Health.

Figures show a 50p minimum would mean a bottle of wine would cost at least £4.50, a pint of 4% alcohol beer would cost £1.14 and a 10-pack would cost about £10.

A two-litre bottle of cider would cost a minimum of about £7.50.

Health Secretary Andrew Lansley has said tackling alcohol misuse is a priority, but it was not clear that a minimum price "is the best way to impact price in order to impact demand".

He believes there is a need to deal with people's attitudes and not just the supply and price of alcohol.

Asda said it was balancing the new alcohol prices with cuts to the cost of essentials, beginning with milk.

The price of 4 pints of milk in English, Welsh and Scottish stores has dropped from £1.53 to £1.25 and in Northern Ireland from £1.28 to £1.10 for two litres.

Alcohol Concern chief executive Don Shenker said: "While we welcome any step to stop the cheap sales of alcohol by retailers, this move is really a desperate and cynical attempt by Asda to stave off future Government legislation.

"The price of Carling lager in their new price structure will still come to around 20p per unit, far lower than recommended by the Chief Medical Officer. The evidence shows this will have no impact on reducing crime or binge-drinking.

"The fact that they are now offering to lower the price of other goods is an own goal - a confirmation that they've knowingly raised the price of food for years to subsidise the losses they make on alcohol. It's a disgrace. All Asda have admitted is that anyone who drinks sensibly has paid more for food over the past few years than they needed.

"Asda should be congratulated on trying to deal with this problem, but if they really want to stop irresponsible alcohol pricing and reduce binge and heavy drinking, they should be offering to raise the price of all their drinks to around 40p per unit or higher. That would have a real impact on lowering alcohol related health harms in local communities and lower food prices even further."