Policy Papers


Wine, supermarkets and alcohol policy

James Nicholls |

Executive Summary

  • Recent concerns over cheap drink have led to a policy debate on minimum unit pricing and the banning of the 'below-cost' sale of alcohol. Such interventions target off-licenses and supermarkets, since alcohol in pubs is generally sold above proposed minimum prices.
  • While pricing interventions often target high-strength beers, cider and spirits, concern has also been expressed over price promotions and three-for-two offers on wine. A dramatic increase in wine drinking has contributed significantly to the marked rise in per capita consumption of alcohol over the last forty years. In recent years alcohol awareness campaigns have drawn attention to excessive wine consumption in the home.
  • Supermarkets and off-licenses have played a pivotal role in the expansion of domestic wine drinking in the UK. The modern system of wine retail and off-licenses was established by William Gladstone in 1860. The debates surrounding Gladstone's reforms have clear parallels with debates over off-licence retail and domestic wine-drinking today.
  • In 1860, public debate centered on issues such as the relationship between pricing and consumption, the monopolistic power of the drinks industry, the role of licensing authorities, British drinking cultures, and the relationship between the 'on' (pubs, bars and restaurants) and 'off' (off-licence and supermarket) trades. Similar concerns remain a feature of contemporary debates on alcohol policy.
  • While the Conservative-Liberal Democrat Coalition supports banning 'below-cost' alcohol retail, political action on alcohol pricing is constrained by concerns over breaching both the spirit and rules of the free market. In Scotland, for example, minimum unit pricing was removed from the 2010 Alcohol Bill partly over fears that it breached EU rules on price competition. In 1860, free trade arguments were also central to licensing and duty reform.
  • The historical record suggests that consensus for licensing and duty reform can be achieved in the face of strong industry resistance, but usually needs to carry with it the support of 'moderate' drinkers.
  • While the alcohol industry has a long history of vigorously defending itself against legislative interventions, it became more fragmented after 1860. Today, the 'drinks industry' has fragmented further, allowing politicians and lobby groups to form alliances which cut across competing industry interests.
  • Policy discussions tend to dwell on the negative impacts of public drinking; a more critical focus on domestic drinking may be appropriate in future.

Introduction

Since the introduction of the 2003 Licensing Act, questions about the relationship between alcohol legislation and popular drinking cultures have been the source of widespread public debate. At the time of the Act's implementation in November 2005, media reports focused almost exclusively on the consequences of drinking in pubs and bars. While the stated goal of the Act was the encouragement of a more 'Continental' style of drinking, many critics claimed it would simply fuel the already disturbing levels of drunkenness visible in many city centres (see Peter Borsay's History & Policy paper, 'Binge drinking and moral panics: historical parallels?').

More recently concerns about alcohol consumption have broadened. On the one hand, the role of supermarkets in driving down the cost of alcohol has come under increased scrutiny. The emergence of minimum unit pricing, and the banning of 'below-cost' sales, as serious policy proposals reflects a growing consensus that pricing strategies in the 'off' trade may be a more significant driver of alcohol problems than, for instance, late licensing in pubs. Related to this has been increased concern among public health advocates about levels of alcohol consumption in the home. In addition to warnings about the role of 'pre-loading' (i.e. getting drunk before going out) in fuelling antisocial behaviour, there has been a concerted effort to highlight the health risks associated with domestic wine drinking. These have focused especially on social groups, such as middle-class professionals, not previously at the forefront of public debates about alcohol-related harm. In 2008, the BMA identified domestic wine drinking as part of a 'UK epidemic' of alcohol misuse and later that year the Department of Health launched a 'units awareness' campaign targeting domestic wine drinkers. In January 2010, the Health Select Committee voiced its support for minimum unit pricing partly as a means of tackling problems associated with young drinkers and the alcohol dependent, but also on the grounds that it could reduce excessive wine drinking in the home.

Domestic wine consumption has grown enormously since the early 1960s. Indeed, the popularization of wine represents one of the most significant developments in British drinking cultures over the last half-century - and it has been driven primarily by sales in off-licenses and supermarkets. Partly because of this, wine now occupies an unusual place in popular ideas about drinking. It retains connotations of civilized consumption drawn from its long history as an elite drink. In a recent book the philosopher Roger Scruton went as far as insisting that wine intoxication was categorically distinct from other forms of drunkenness: altogether more lofty and refined. Of course, wine is also associated with 'Continental' drinking and the idea that Mediterranean drinkers have a more sophisticated attitude to alcohol use than northern Europeans (despite having generally higher levels of overall consumption). However, as British consumption continues to rise, as three-for-two offers multiply on supermarket shelves, and as global brands dominate the market, the elite sheen fades and it becomes harder to make special claims for wine's civility as compared to other drinks.

Recent concerns about the role of supermarkets in normalizing high levels of consumption, as well as popular ideas about the cultural status of wine-drinking, both have roots in reforms to the wine trade introduced by William Gladstone in 1860. By looking at those reforms, and the discussions which surrounded them, we can trace the source of some key issues facing policy-makers today: issues around the relationship between the 'on' and 'off' trades; questions about the role of licensing authorities in regulating supply; debates over the relationship between pricing and consumption; and the thorny question of whether wine is indeed a more 'civilized' (and civilizing) drink than, say, beer.

The wine trade in England

Of course, the key factor shaping drinking cultures in Britain is that, being an imported commodity, wine has been harder to acquire, and therefore more socially exclusive, than beer or (since the eighteenth century) spirits. Nevertheless, wine consumption, and legislation, has a long history in the United Kingdom. In 1330, for instance, an Act was passed to limit excessive wine prices and to outlaw adulteration; in 1536 a law was introduced setting maximum prices for wine retail according to type; and in 1553, wine taverns were subjected to licensing restrictions comparable to those which had been imposed on alehouses the previous year. However, whereas alehouse licensing was explicitly designed to reduce disorder, tavern licensing was geared towards maintaining exclusivity by severely restricting the number of taverns allowed in any one town or city, as well as addressing issues of quality control and, of course, revenue generation.

For the same reason, wine has also tended to become embroiled in wider geopolitical conflicts. Anglo-French relations, in particular, have often hinged on the wine trade. Following the accession of William of Orange in 1688, it became British Government policy to challenge French economic power through restrictions on wine imports. In 1693 and 1697 duties on French wine imports were increased, and in 1703 the Methuen Treaty sought to decimate French wine imports by establishing enormously preferential duties for Portuguese wine in exchange for reciprocal reductions in duties on British goods. Although wine duties were eventually equalized in 1831, the fact that the new tariffs were applied by volume rather than alcoholic strength meant that Spanish and Portuguese fortified wines, such as port and sherry, still held a significant advantage: a gallon of strong port was worth far more in retail terms than a gallon of less alcoholic table wine.

The 1860 Treaty of Commerce

It was this system of duties which was overhauled by William Gladstone in 1860, and which led to a radical change to the licensing system more broadly. Put briefly, the duties on all foreign wine were equalized and reduced from 5s 10d (29p) per gallon to 3s (15p) per gallon. Shortly thereafter, tariffs were set according to strength. Hence, from 1861, wine above 26% proof was charged at 2s (10p) per gallon, wine between 15 and 25% proof was charged at 1s 6d (7.5p) per gallon, and anything weaker was charged at just 1s (5p) per gallon. This both leveled the playing field between fortified and non-fortified wines, but also - in theory - facilitated the promotion of less alcoholic drinks.

The idea of reforming the duties on French wine had been around for some time, especially since the adoption of free trade principles under the Second Ministry of Sir Robert Peel. In 1852 a select committee looked into the question, and while it failed to produce a final report it triggered a debate on wine tariffs which rumbled throughout the 1850s. In 1853, Gladstone (then Chancellor of the Exchequer) stated in the House that he supported the principle of reducing wine duties; however, he insisted that the increased consumption needed to make up the revenue shortfall was simply inconceivable over the short term. Three years later, Gladstone included wine tariff reform in a wish list of policy proposals which he drew up privately and sent to Sir James Graham (an ex-Home Secretary) for comments. Despite his anti-protectionist leanings, Graham rejected the idea on the grounds of revenue loss and observed that wine would have to remain a 'luxury of the rich'.

It was, ultimately, the pressing need for improved political relations between Britain and France which swung the argument. Visiting Gladstone in September 1859 the veteran free trade champion Richard Cobden proposed travelling to France to see whether worrying evidence of mutual sabre-rattling could be defused by the establishment of better trading relations. The eventual outcome was the 1860 Treaty of Commerce, which significantly reduced the tariff barriers on commodities traded between the two countries - the salient French import being wine. Cobden saw the Treaty of Commerce as transforming political and military relations through trade. Writing to the chief French negotiator, Michel Chevalier, in 1859, he claimed that free trade was 'God's own method of producing an entente cordiale, and no other method is worth a farthing.' Commenting on widespread fears that a French military invasion was imminent, the Cobdenite Morning Star wrote cheerfully that 'the French, it is true, are about to make a descent upon our shores, but they will be armed only with silks and clarets, and though we shall meet them with broadsides of iron and coal, our missiles will be hurled in the inoffensive form of freight.'

The Treaty of Commerce, therefore, reflected the centrality of wine in Anglo-French economic relations. However, it also demonstrated the firm Cobdenite belief that international trade was the surest guarantee of international peace. While hardline free traders complained that such a bilateral treaty was, by definition, a 'gross departure' from the principles of free trade (which was meant, by definition, to be initiated unilaterally), William Gladstone insisted that the Treaty of Commerce represented a complete 'abandonment of the principle of Protection.'

Price, consumption and taste

Although driven by political and economic necessity, Gladstone was keen to depict the Treaty of Commerce as a progressive social measure. Presenting it to Parliament in his famous Budget speech of 1860 (a speech aided, according to his own diaries, by 'a great stock of egg and wine'), Gladstone insisted that the taxes imposed on French wine since 1703 had distorted British tastes and made wine - echoing Graham's comment three years earlier - a 'rich man's luxury'. The preceding years had seen much debate in the press on whether the British preference for beer was a case of nature or nurture: some argued the British were constitutionally averse to wine, others insisted that its relative unpopularity was entirely due to its expense. The relationship between price and consumption was then (as now) at the heart of the issue. While Gladstone had argued in 1853 that a duty reduction could not transform drinking behaviours quickly enough to justify the revenue loss, by 1860 political expediency demanded that he change his mind. Taste, he told fellow MP's, 'was not an immutable, but a mutable thing' - and, in the case of wine, the catalyst for those mutations was affordability.

Licence reform and industry resistance

Gladstone also argued, however, that if the reduced wine duties were to encourage a new culture of wine drinking in Britain then the existing system of licensing also needed to be reformed. As it stood, alcohol retail had become concentrated in public houses - few of which sold food, and most of which were owned by brewers in a structure of vertical integration known as the 'tied house' system. The combination of magisterial licensing (often assumed to be corrupt) and the tied house system had long been condemned. Undermining this relationship was a motivating factor behind the 1830 Beer Act, which allowed 'beerhouses' (distinct from public houses in that they could not sell wines or spirits) to open without a magistrate's licence. Throughout the nineteenth century, the tied house system remained a target of both free traders and the temperance movement: it produced what the Saturday Review called a 'tyrannical oligarchy', and the Times an 'odious monopoly', which gave brewers enormous economic and political power.

Immediately following the adoption of the Treaty of Commerce, Gladstone presented a Bill which sought to allow both grocers and restaurateurs to sell alcohol without acquiring a justices' licence to do so. It was presented as a 'necessary correlative' of the wine duty reforms - allowing the new affordable wine to be traded more widely - but it was also an attempt to reform the alcohol trade more broadly.

When trailed in the Budget Speech, it was promised that the new licensing legislation would allow restaurateurs to sell wine or beer without having to apply for a justice's licence. Gladstone's stated aim was to introduce a 'change favourable to sobriety' by weakening the 'unnatural divorce between eating and drinking' which nudged British consumers towards drunkenness. Gladstone was also taking on the principle of magisterial discretion - the so-called 'principle of need' - which allowed licensing justices to base their decisions on whether they felt a particular area was already sufficiently supplied with alcohol outlets. In both 1830 and 1860, free-traders objected that the market, not the licensing authorities, should be the judge of 'need' (and much the same principle informed the stipulations of the 2003 Licensing Act, which required that licensing authorities presume in favour of any licence application in the first instance). Far from disadvantaging big brewers, 'need' worked in their favour: brewery-owned properties increased massively in value once a licence was conferred. Gladstone's proposed reforms undermined this lucrative - if unintended - consequence of licensing law, and the brewers quickly went on the offensive. Under pressure from the established trade, Gladstone revised the Bill so that only wine - not beer - could be sold without a licence, and he was accused by the Saturday Review of an 'inchoate squeezeableness' for his troubles.

Wine and temperance

With temperance campaigners already predicting an epidemic of wine-sodden drunkenness, Gladstone had to commend his Bill to the House 'not [on] its importance for fiscal ends' but 'for its promotion of temperance and sobriety as opposed to drunken and demoralized habits'. Whatever his true motives, Gladstone sought to present the Bill as 'a measure which in principle aims at promoting the use of lighter and more innocuous drinks in comparison with the spirits which are sold now.' One later commentator went as far as claiming that the measures placed Gladstone 'in the first rank among the apostles of temperance.' Not that this won Gladstone much support within the temperance movement itself. Much to the amusement of sceptical commentators, many radical temperance groups joined forces with the brewers to denounce the moral anarchy that would surely follow any reform. Debating the Bill in the Lords, one Member complained that 'Mr. Gladstone, with an iron will and an iron arm, has driven [wine] home to free trade ... which, if not checked, must lead to ... a saturnalia of drunkenness', while a memorandum produced by the brewers warned that 'not only shall we have the working classes degraded by these temptations, but our females and domestic servants, and even the children, will be tempted to these places for their pennyworth of wine.'

For the supporters of reform, the joint opposition of brewers and teetotallers took hypocrisy to an altogether new level, and Gladstone was widely praised for having 'been bold enough to take the side of sobriety and common sense against these two united forces of fanaticism and monopoly.' Gladstone refused to accept the temperance 'doctrine that the use of wine is to be treated as an unqualified mischief', and he was steadfast in his insistence that increased wine drinking would promote moderation. Reducing the cost of vin ordinaire would, from his perspective, civilize British drinking: it would establish a more Continental drinking culture, reduce public drunkenness, and give the general population access to what had hitherto been an elite pleasure. After the Bill passed into law, one enthusiastic commentator felt moved to suggest the impending transformation of British drinking cultures would 'establish forever the final victory and glory of Free Trade.'

The impact of the 1860 reforms

Many of those who supported the 1860 Refreshment Houses Act did so precisely on the grounds that it undermined 'the monopoly of the great brewers and distillers, and ... let[s] loose competition against the publicans.' The Act transformed the alcohol retail market by laying the legislative ground for the modern system of off-licences. An Act of 1834 had created separate licences for on- and off-sales, but these applied only to beerhouses; the full public house licence - which covered wine and spirits retail in addition to beer - permitted the sale of alcohol for consumption both on and off the premises. Under the 1860 Act, the market for off-sales of wine was thrown open. Within a few years, companies such as Victoria Wine and Gilbey's were leading the way in developing branded high-street outlets for domestic consumers. By creating what became known as the 'grocers' licence', the new legislation established a clear line of conflict between the on and off-trades, which would become extraordinarily heated in subsequent decades.

Despite the naysayers, Gladstone was vindicated - at first. Wine consumption increased enormously after 1860 - over ten times as much French wine was imported in 1880 (just under seven million gallons) than had been in 1850 (600,000 gallons), inaugurating what some called 'the era of cheap Gladstone claret.' At the same time, sales of stronger port declined significantly. However, consumption of beer and spirits also increased over the following two decades, somewhat undermining Gladstone's claim that drinkers would switch from beer and spirits to more 'civilized' wine. Rather, it seemed that wine was simply added to existing consumption - and primarily, so it appeared, among the middle classes. Furthermore, by the turn of the century the increase in consumption tailed off significantly, and the wine trade suffered an even more marked decline during the First and Second World Wars than beer and spirits. Nevertheless, both the infrastructure and taste for non-fortified wine consumption was established, and when the trade began to recover in the 1960s it was grocers - especially the supermarkets - which led the way in effecting the kind of democratization that Gladstone had envisaged a century earlier.

Competing interests

The fact that wine consumption eventually became such a key feature of British drinking culture (albeit a century after Gladstone attempted to start the process) is a testament to the effectiveness of free trade as a mechanism for encouraging consumption - though perhaps not, as Gladstone and others rather idealistically supposed, for promoting moderation. Economists may quibble over price elasticities, but the fact is that globalization and supermarket retail have made wine considerably more affordable since the 1960s, and consumption has increased considerably at the same time. Of course, this reflects the 'democratization' of wine both in terms of class and gender: while wine is still consumed primarily by middle-class drinkers, this distinction is flattened among women drinkers - who make up the larger portion of wine consumers as a whole.

The popularity of supermarket wines, alongside the international rules of free trade, have contributed to a marked reticence among English politicians to openly support minimum unit pricing (the situation is different in Scotland, where it became a stated policy goal of the Scottish National Party). When the Chief Medical Officer, Sir Liam Donaldson, came out in support of minimum unit pricing in March 2008 both the Prime Minister and the leader of the Opposition swiftly rejected the idea. They recognized that it could be construed as a mechanism for pricing out the poor, while leaving the wealthy to their bibulous proclivities. If they knew their history, they would also have been aware that governments which are seen as attacking moderate drinkers have often suffered real political damage. Famously, Gladstone blamed the loss of the 1874 Election on a botched Licensing Act passed two years earlier, claiming that the Liberals had been 'borne down in a torrent of gin and beer'. When the Liberals lost the 1895 Election many blamed the defeat on the party's support for local prohibition.

Nevertheless, there is clearly sufficient public approval for action against cheap alcohol to make some kind of legislative intervention a viable political option. Whereas, in 1860, the pub trade was widely perceived to be a 'tyrannical oligarchy' today it is often the supermarkets that are accused of distorting fair trade. Certainly, the recent call for minimum unit pricing arose from widespread condemnation of cheap supermarket alcohol, and this has produced some unlikely alliances: in 2009, for example, Alcohol Concern and the Campaign for Real Ale were united in their positions on both minimum unit pricing and the 'valuable social function' of community pubs. In 2010, a co-founder of the Alcohol Health Alliance voiced support for a cut in VAT charged on alcohol in pubs, stating pubs were 'part of the solution not part of the problem.' Unlike 1860, this coalition of health lobbyists and trade defenders articulates a coherent policy perspective with sizeable cross-party political support. Gladstone was successful in taking on a trade which, though powerful, was perceived as overweening and monopolistic; what was true for the pub trade then may be true for supermarkets today.

Where the alcohol industry was relatively monolithic in 1860, with common brewers dominating both the production and retail side of the trade, the field is far more fragmented today. Alcohol production is globalised, while alcohol retail involves fierce competition between supermarkets, off-licenses, bar chains, independent pubs and online suppliers. Gladstone's reforms were successful in part because he exploited the conflicts between independent retailers, international traders and established brewing giants. Even more so today, on questions of alcohol policy the drinks industry doesn't speak with one voice (especially since the break-up of the tied-house system in the early 1990s): the interests of multinational producers, supermarket retailers and pub landlords clash as much as they overlap. Governments seeking to reform one aspect of the alcohol trade (such as cheap supermarket sales) may well find their strongest support coming from other sectors of the industry (such as independent pubs).

Although the old-fashioned temperance movement is long dead, an influential new alcohol control movement has emerged in the UK spearheaded by public health professionals and now operating under the umbrella of the Alcohol Health Alliance (founded in 2007). However, just as free trade trumped temperance in 1860, so the principle of market freedom and the sovereign consumer remains the most politically effective counter to public health demands today. Despite this, the neoliberal argument has been dented by the apparent failure of the 2003 Licensing Act to establish a Continental drinking culture, or the kind of significant reductions in crime and consumption envisaged by its promoters - although it should be noted that the most significant increases in both overall consumption and city-centre drinking predated the Act, and consumption has declined steadily since it was implemented. Furthermore, the Coalition's commitment to strengthen the discretionary powers of licensing authorities is a partial retreat from the market-centered approach to 'need' adopted by New Labour. In January 2011, the Coalition announced that it would seek to ban the 'below-cost' sale of alcohol. However, the level at which the minimum price was set remained far below the prices charged in pubs - suggesting a continued reticence towards regulating the off-trade as heavily as pubs and bars.

Conclusions

Today, more alcohol is sold in supermarkets than in pubs, and wine sales continue their ascent while beer declines. Most wine is sold for consumption in the home (as, indeed, is just under half of all beer). Gladstone's vision of a transformed drinking culture has, to a large extent, been realized: domestic wine drinking is part of everyday life across swathes of contemporary society. Whether this has tended towards the 'promotion of sobriety' is, however, questionable. What is more, while pubs have historically been the focus of legislative interventions targeting alcohol harms, whether beer drinking in a public environment is less 'civilized' than drinking wine behind closed doors remains very much open to question. Although public drinking still dominates the headlines, perhaps a greater policy focus on domestic consumption would better reflect the balance of risks posed by alcohol today.

Further Reading


Asa Briggs (1985) Wine for Sale: Victoria Wine and the Liquor Trade 1860-1984. Chicago: Chicago University Press.

John Greenaway (2003) Drink and British Politics since 1830: A Study in Policy Making. Basingstoke: Palgrave.

Sarah Holloway, Mark Jayne and Gill Valentine (2008) ''Sainsbury's is my local': English alcohol policy, domestic drinking practices and the meaning of home', Transactions of the Institute of British Geographers 33.4: 532-47.

James Nicholls (2009) The Politics of Alcohol: A History of the Drink Question in England. Manchester: Manchester University Press.

James Nicholls (2010) 'UK news reporting of alcohol: an analysis of television and newspaper coverage', Drugs: Education, Prevention and Policy.

James Simpson (2004) 'Selling wine to reluctant drinkers: the British wine market, 1860-1914', The Economic History Review 57.1: 80-108.

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