More tax and labelling ‘won’t stop alcohol harm’

Increasing alcohol labelling and excise tax may not be the answer to tackling counterfeiting and health issues, a group of EU ambassadors, MEPs and producers have found.

Producers are asked to submit new ideas on ways to reduce alcohol harm, other than increasing labelling or taxes

Instead, further work needs to be done to discover new ways of tackling alcohol harm through counterfeiting and over-indulgence.

The findings came during a panel discussion held as part of spiritsEUROPE’s 2014 Spirits Summit in Brussels this week.

Georges Friden, Luxembourg ambassador to the EU, said that instead of focusing solely on adding excessive tax restrictions or further labelling regulations, such as detailing calorific content or ingredients, the industry must seek new ways to reduce counterfeiting and alcohol harm.

“Clearly the pressure is on right now to think of new ways to tackle harm reduction on one side, while looking at long standing issues on the other side,” he said. “This session demonstrates that maybe just adding a few more things on the label or more tax are probably not completely what is needed, and more imagination and more proposals is what we should be aiming at right now.”

Some drinks groups are already thinking outside the box for new ways to reduce excessive alcohol consumption. Earlier this month Diageo hosted a two-day “hackathon”, where it challenged technical wizards to design accessible digital tools that promote responsible drinking.

Spyros Ghikas, managing director Europe Middle East and Africa for Remy Cointreau, added that since January 2013, the group has seen 18 tax increases across the region, and that 70% of its products’ RRP is comprised of excise tax and VAT.

“These increases have created important negative impacts to our sector,” he said. “Significant issues to producers and to trade include an increase in loss of jobs from bankruptcies or cost cutting, and an increase in illegal trade, which in turn increases loss of taxes for the state, and has an impact on health for consumers which is the major issue here.

“Regarding counterfeiting, I’m afraid to say due to the significant excise tax increases in the last year, we may see an increase in instances.”

Ghikas pointed to the example of the counterfeiting crisis in the Czech Republic in 2012, when 40 people died after drinking harmful illegal alcohol.

Higher taxes increase counterfeiting

Paul Skehan, director general of spiritsEUROPE, the European representative body for spirits producers, agreed, arguing that extreme taxation has helped create “a big shift into the illegal market”.

He added that simply reducing legal alcohol consumption through raising prices and cutting advertising may not be enough to curb alcohol harm.

“The battleground will be drawn in EU Parliament and in some member states, whether a reduction in consumption overall will be perceived as a reduction in harm. On the NGO and health community side there is a push toward the Nordic model – push up the prices, reduce access and cut out all advertising and if we do that consumption falls. Of course what we see in the Nordic model is that if it is a golden bullet then harms there would be wiped out, but they’re not.

“We need to get across that the way to target harm is in targeted approaches. We need to target those who are abusing alcohol and running into difficulties and target them and help them. If not, the health community will say consumption is the target.”

MEP Herbert Dorfmann encouraged producers to come forward to the commission and parliament with new ideas to tackle the issues.

“It’s clear there is a problem with alcohol, but the question is how to achieve the goal and that’s the important thing,” he said. “What are your proposals? Otherwise an idea in Parliament and the Commission goes on, and we know it’s not possible to solve with only labelling.”

Thomas Heynisch, deputy head of unit at the European Commission underlined that the Commission is “committed to protecting the competitiveness of the spirits sector because we know about the contribution it makes to the EU economy”.

The panel also included Mella Frewen, director general of FoodDrinkEurope.