Trade associations often represent the collective views of their members (Rajwani et al., 2015). As such, they are prone to factions and cleavages, not only between the trade associations representing different sectors of the industry but also within the trade associations themselves because of the structural composition and diverse interests of their members. This section examines the cleavages arising between the trade association based on the assumed collective interests of the group. The following trade associations participated in the MUP debates: SLTA, WSTA, BBPA, SBPA, SWA, NACM, CAMRA, SGF, and SRC. The main interests of the trade associations were to protect both business and societal interests. However, some trade associations exhibit a mixture of both interests, arguably because of their diverse membership structure.
6.3.3.1 Business Interest Cleavage
SWA, WSTA SRC, SGF, and NACM exhibited pro-business interests. The structural composition of these trade associations is homogenous in that they represent a sector of the industry, i.e. producers (of specific products, i.e. wine, whisky, or cider) or retailers. The SWA is the main trade body of scotch whisky producers, and protects the interests of over 117 distilleries across Scotland (SWA, 2016). Its key role is to advance the global interests and profile of the scotch whisky brand, its members, and the industry. TheWSTA represents over 340 UK companies who produce, import, export, bottle, and retail wine and spirits. The
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NACM represents the interests of cider makers, and the SRC and SGF represents the off-trade retail sector. These off-trade associations are fundamentally pro-market, which is reflected in their consultation submission and their interactions with the government and policymakers. In protecting the rights of their members, the SWA challenged the legality of the MUP Bill on the basis that it contravenes the EU competition law:
Minimum pricing is a barrier to the free movement of goods. It is likely to be found illegal under the EU Treaty (Article 34), and likely to be in breach of World Trade Organisation rules (GATT Art.III) (SWA MIN65, paragraph 15).
And that:
Market access restrictions globally threaten industry competitiveness [and]
encourage increased barriers to the trade of Scotch Whisky overseas (SWA written submission to the FC. paragraph 17).
Mr Campbell Evan, representing the SWA during the evidence session to the FC, added that if Scotland were to set a precedent by getting past that illegality, they would be concerned by the principle of overcoming trade rules, and the subsequent trade restrictions by countries who would want to favour their local industry by keeping imports out. “Our concern is that countries will be allowed to bring in barriers to trade using spurious health rules that they will dream up to keep imports out” (see pg. 427). The WSTA supports the SWA stating that MUP:
… is inconsistent with the operation of the free market for the state to intervene on price. This view is supported by European Competition Law, itself intended both to prevent barriers to free trade and to protect the consumer interests (WSTA MIN93, pg. 1).
All five trade associations, responding to the committee’s call on the pricing mechanism, insist that the Bill, if introduced, should be re-evaluated after a time period so that an assessment may be made on its effectiveness in reducing misuse (see for example SWA, Pricing Mechanism, pg. 1 and WSTA, Pricing Mechanism pg. 1).
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Although the SWA and WSTA favour market control, they object to the use of market indices such as the Retail Price Index (RPI) and Consumer Price Index (CPI) for the automatic up-rating of the minimum price, as such regular changes would “distort the contractual relationship between the producer” and the retailers (SWA, Pricing Mechanism, pg. 1). In addition, an automatic mechanism for changing the MUP is not desirable because it would fail to account for changes in consumption, harm, taxation, unintended consequences, and the impact on different products (SWA and WSTA Pricing Mechanism, pg. 1). Each element, the SWA states, “must be properly assessed before any change might be contemplated.
Thus, only a full review can be considered as a review mechanism.” (SWA, Pricing Mechanism, pg. 1). Despite the pro-market orientation of the SWA and WSTA, they reject the use of market-based indices for regular adjustment of the minimum price.
The SGF, at the time of the debates, were pro-market as they worried about the loss of businesses for their members close to the Scottish-English border (SGF MIN70, paragraphs 16 and 20). Their interest, and the SRC’s interest, changed in order to align more closely with the government’s interest following the defeat of the SWA in the court, as shown in the extracts below:
5 or 6 years ago when the court case started, I think retailers were sceptical about MUP. About a year and a half before the court case was finally settled, we moved our position to be along the lines of not necessary taking a pro or negative view but simply focused on the specifics of how we implement it (Participant 3 – retail trade association).
Once it became clear that the policy was going to go ahead the responsibility was to make sure that our retailers were able to comply because it was a new condition of licence (Participant 5 – retail trade association).
The SGF and SRC business interests remained the same even though their strategy changed over the course of the debates. However, the change in strategy for the SGF brings the organisation closer to achieving business interests, which includes to narrow the gap
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between off-licenses and big supermarket alcohol prices, and enable its members to compete with larger stores in negotiating prices with producers.
6.3.3.2 Society Interest Cleavage
The society interest reflects on how some industry actors talk about the society and the need to protect it, despite their overshadowing business interests. The SLTA and CAMRA, in their consultation responses, were interested in protecting consumers and society against the practices of big multi-national producers and retailers. SLTA and CAMRA’s interests lie in curtailing the easy availability of cheap alcohol in the off-trade retail sector, which fuels alcohol problems and causes a problem for on-trade retail establishments.
The SLTA advocates for MUP to protect the business of its members, the on-trade retailers.
In protecting the business interests of its members, SLTA seeks a level playing field in the price of alcohol, in order to stop the loss-leader practices of the supermarkets and to “stop those retailers who undermine the efforts of government, alcohol related public bodies and charities, and responsible retailers, to better control Scotland’s drinking culture” (SLTA MIN72, pg. 2). If MUP brings about a level playing field, society is said to benefit as consumers would be encouraged to drink in “regulated, safe and sociable environments of their local community pubs” (CAMRA MIN14, paragraph 2.5) rather than solitary drinking. A level playing field is also anticipated to reduce the need for pre-loading in young people, which causes problem in the night-time economy (SLTA MIN72, pg. 1; see also Stewart MIN83, pg.
2). In addition, the SLTA opines that a MUP that addresses the loss-leader practices and duty fraud by the off-trade will benefit the exchequer in revenue generation and thus society as a whole (SLTA MIN72, pg. 2).
CAMRA’s interests lie in the loss-leader practices of the supermarket and the effect these have on pubs. It states that “alcohol loss leaders are driving consumption away from well-run community pubs and towards drinking at home or on the street, contributing to the closure of many Scottish community pubs” (CAMRA MIN14, paragraph 1.2 and 1.3). The
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interest and strategies of CAMRA aligned with that of the SLTA pre-2013. However, their strategy changed in 2013, but their interests, as shown in the extract below, remained unchanged:
One of our objectives is to try to keep pubs open, narrow the gap between supermarket and pub prices (Participant 2 – trade association).
Participant 2 shared their concerns about consumer choices, the price they must spend on their drinks, the impact of government price-setting on business freedom, and the potential for the government to abuse the system.
However, the SLTA caution the Scottish Government that “Minimum Price is not a panacea”
and that they are “basically in agreement with establishing a minimum alcohol sales price based on a unit of alcohol …” (SLTA MIN72, paragraphs 3 and 4). They suggest that MUP should be introduced in addition to a “ban on off-sales promotion (MIN71, pg. 1). With regards to the evaluation of the minimum price, the SLTA favours the use of either the consumer price index (CPI) or the retail price index (RPI) in addition to the Sheffield-based appraisal in year 3. The CPI and RPI are both market-based inflation indexes. The SLTA stated that these choices were to “ensure that the price is proportionate to harm caused by alcohol” (SLTA Pricing Mechanism, pg. 1).
6.3.3.3 Mixed Approach Cleavage
Mixed approach refers to industry actors whose interests are varied because of the composition of their members. The SBPA and their sister trade association the BBPA can be said to have adopted a mixed approach of pro-business and pro-society interest. This is assumed to be because of their composition and the diverse interests of their members. For example, their members consist of beer producers and on-trade retailers (Pubs). Some beer producers, like Diageo, who are members, also produce other alcoholic beverages such as scotch whisky and vodka, which would be affected by the MUP. The SBPA stated in their submission that the individual views of their members vary on the issue of minimum pricing and that as an association they do not have a collective position (SBPA MIN19, pg. 1). The
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interest of SBPA is to protect the business interests of its members by improving their members' ability to compete and remove the price variation that would arise between Scotland and the rest of the UK. Their sister association, the BBPA, took a firm stand and opposed the introduction of MUP. The BBPA’s submission positioned MUP as a form of tax which they referred to as “equivalence”. The BBPA aims to protect the business interests of its members and argues that focusing on alcohol units only to determine product price negates the differences in “production cost”; drinks’ “composition and characteristics”; and the overall effect on the “wider economy, health and social dimension” (BBPA, pg. 2). The BBPA is not against government tax but argued that the tax on beer should be fairer bearing in mind the positive association of beer to job creation and relaxation and the negative impact of high-strength alcohol on health42. The BBPA’s strategy here is for government regulation to make alcohol tax fairer. In protecting the business interests of its members and by advocating for a reduction in beer tax, the BBPA is seen to also advocate for societal interests. These societal interests are seen when they positively associate beer drinking to enjoyment and relaxation (BBPA, pg. 5), and promote the notion that “fairer taxes on beer would create 30,000 new UK jobs” (BBPA, pg. 6) and would “generate almost 50 per cent more in tax revenues than spirits” (BBPA, pg. 7, emphasis in original). The SBPA and the BBPA display similar interests in their submissions but with different strategies towards achieving their interests.
Summary: The cleavages presented reflect the structure of the industry and the functional identities of the industry actors as producers, retailers, and trade associations, as demonstrated in Figure 5. The findings reinforce those of Holden et al. (2012) on structural/functional cleavages in the alcohol industry. Holden et al. (2012) labelled the cleavages they observed as intra-industry and inter-industry cleavages, and the findings of this study, as demonstrated above and summarised in Figure 5.
42 Historically this echoes William Hogarth’s famous Beer Street and Gin Lane etchings from the 18th century and Warner (2002) writings on ‘Gin Wars’.
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Figure 5: Structural and functional analysis of observed cleavages
Source: Author43
The reorganisation of these cleavages based on interests and strategies suggest that the structural approach, which is dominant in the literature, may not entirely tell the story about industry cleavages. For example, Buckton et al. (2019) used an ideological perspective to analyse the cleavages (what they also called polarisations) present in the UK sugar tax debate to provide more insight to and complement the structural perspective. Following this emerging approach to understanding cleavages, I employ a discursive approach to further understand and complement the findings from the structural perspective above.
43 Figure 5 above does not represent all the industry actors i.e. trade associations like WSTA, and SRC who represent - the off-trade. This is because the analysis of the off-trade sector for 2nd level intra-sectoral cleavage choose not to focus on individual actors who oppose/support but represented as off-trade as a sector.
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