Border retailers fear cross border exodus from MUP

THE Government is pressing ahead with plans to introduce a Minimum Unit Price (MUP) for alcohol products, despite a lack of alignment with Northern Ireland. Earlier this month, Cabinet signed off on the introduction of MUP, which is listed in Section 11 of the Public Health Alcohol Act, with a commencement date of January 1, 2022.

The plans set a minimum price of 10c per gram of alcohol, raising the price of a can of lager to at least €1.32. A 750ml bottle of wine will cost at least €7.75 and the minimum price for a 700ml bottle of gin or vodka will be €20.71. According to industry group Drinks Ireland, this will result in the price differential on alcohol between the Republic of Ireland and Northern Ireland rising to 38%.

Patricia Callan, Director of Drinks Ireland, believes that its introduction will “drive many price sensitive households, who have already been hard-hit by the pandemic, to shop across the border. It would also place massive pressures on border businesses, and lead to an increase in illicit alcohol smuggling at the border, all at a vulnerable time for our economy.”

Charlie McClafferty, proprietor of McClafferty’s Carry Out Letterkenny, told Retail News that he blamed large supermarkets for the situation. “They are fighting to get people into their shops where they can take hits on selling cheap alcohol,” he said. “We’re all tired of this. We can’t compete at all, especially at Christmas time. I firmly put the blame with the big boys. There was no responsible trading of alcohol for a long time.”

Retailers are overwhelmingly in support of MUP, but they believe it should be introduced on a unilateral basis with Northern Ireland. “When there are price differentials between the north and south, currency fluctuations, and the lure of cheap alcohol, Irish consumers do considerable amounts of shopping in the north,” said Tara Buckley, RGDATA Director General, who noted that consumers are likely to buy other products while shopping for booze across the border.

Arnold Dillon, Director of Retail Ireland, concurred: “If consumers travel to Northern Ireland to shop, they will inevitably spend money in a wide range of retail and hospitality outlets, not just in grocery and off-trade. This will be at the expense of struggling businesses here. While retailers in border regions will be hit hardest, we have seen in the past that consumers will travel long distances to save money.”

The Government had previously vowed to introduce MUP when similar rules came into force in Northern Ireland. “The introduction of this Act was predicated on it being jointly enforced with the north,” said Vincent Jennings of the Convenience Stores and Newsagents Association (CSNA). “Now it is going ahead regardless of what the north does.”

Stephen Donnelly TD, Minister for Health, said his department decided to overlook the terms laid out within the Programme for Government, after Robin Swann, Health Minister in Northern Ireland, opted not to introduce MUP. “That why we are acting now,” said Donnelly. “It’s likely that minimum unit pricing would not be introduced in Northern Ireland until 2023, and possibly longer. That would be nearly five years after we decided in Ireland to adopt the measure. And we as a Government are not willing to wait that long.”

Leo Varadkar TD, Tánaiste and Minister for Enterprise, Trade & Employment, also admitted he was contradicting his own previous statements: “I’m on the record as saying that we should only move ahead with minimum unit pricing in tandem with Northern Ireland, and that it wouldn’t work if people were crossing the border to buy cheaper alcohol. But I’m also on the record as saying that we cannot wait forever. And with Northern Ireland’s recent announcement, we believe we have to proceed now.” Tara Buckley said that certain ministers pushed for the immediate introduction of MUP. “My understanding is that Frank Feighan [Minister of State

Tara Buckley, RGDATA Director General

Vincent Jennings, CEO of the CSNA

for Public Health] wanted it to be introduced in September [2021]. At least the Government listened a bit and pushed it to January [2022].”

The influx of cheap alcohol into the state arguably began in 2005, following the decision to repeal the Groceries Order under then Minister for Enterprise, Trade and Employment, Micheál Martin TD, which has been credited with allowing multinationals to use below cost booze as a footfall driver. “This started with the removal of the Groceries Order,” said Jennings. “Every person involved in making that decision was aware of the concerns in front of them relating to the danger of making alcohol a loss leader.”

MUP, without Northern Ireland’s alignment, has been praised by some alcohol retailers. According to a recent report in Sunday Business Post, the National Off-Licence Association (NOffLA) lobbied the Department of Health to push forward with the measure without waiting for Northern Ireland.

“As responsible retailers of alcohol, NOffLA supported the Public Health (Alcohol) Act whole-heartedly and in full, including Minimum Unit Pricing (MUP) since the enactment of the legislation in 2018,” Evelyn Jones, NOffLA Director, told Retail News in a statement. “As a targeted alcohol pricing policy to control the retail of ultra-cheap alcohol products, it is important to remember that MUP will have no impact on the vast majority of alcohol products sold responsibly.”

NOffLA claimed that “cross-border shopping has not meaningfully increased between Scotland and England since implementation of MUP by the Scottish Government in 2018.”

But many border retailers disagree. The recent opening of shops in Northern Ireland following Covid lockdown, prior to the equivalent happening in the Republic, led to throngs of shoppers crossing the border to NI towns such as Newry.

“The situation in Scotland was totally different,” claimed Buckley. “We have experience, over the years, of how consumers react when there is significant price differences between north and south.” Dundalk Chamber has called for MUP to be only introduced on an all-island basis: “We do not believe that this isolated measure is a step in the right direction.”

Retailers in the Republic now face a double whammy of added cost, and potentially lost business, following the impending introduction of the deposit return scheme, which will require retailers to accept used bottles cans for recycling.

“The plan was for that to go ahead jointly with Northern Ireland,” noted Buckley. “It would make more sense as an all-island initiative. People could return cans or plastic bottles purchased wherever on the island. But now we’re doing it on our own. Border retailers are going to have to charge deposit and return on cans. You will get a refund if you bring back the can, but it is still going to be another incentive for people to go north.”

Retailers now wonder if Northern Ireland will ever align itself with the Republic on minimum unit pricing. “Our fear is once the executive sees the flow of customers coming up from the south, and doing their shopping up north, they will never introduce MUP,” concluded Buckley.