EUROPEAN ALCOHOL AND HEALTH FORUM. UK Responsibility Deal pledge on Alcohol Unit Reduction

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1 EUROPEAN ALCOHOL AND HEALTH FORUM UK Responsibility Deal pledge on Alcohol Unit Reduction Scott Wilson Director of Corporate Affairs, Molson Coors Europe Co-chair of the Low Alcohol Workgroup of the UK Responsibility Deal

2 Is it possible to sustainably tackle excessive drinking by stimulating a meaningful reduction in units consumed and increasing commercial revenue opportunities? UK ALCOHOL Beer Cider Wine (inc made) Spirits Volume (HLs) 46 million 9 million 14 million 1.15m (100% alc) 70m 72m HLs (av 4.2%) (av 5%) (av 12.5%) Units 20bn units 4.5bn units 17.5bn units 11.5bn units 53.5bn 1 billion units by 2015

3 The Public Health Responsibility Deal is an effective framework in the UK for drinks producers and retailers to work in partnership with the Government, parents and employers, to help reduce alcohol harms. Alcohol consumption is falling in the UK The vast majority of people (78%) drink within Government guidelines Levels of binge drinking at the lowest recorded levels amongst young people There are still too many people misusing alcohol Drinks producers and retailers are determined to help reduce these harms. Profit and social responsibility are not mutually exclusive We are committed to provide better information for consumers Responsible drinking info on 80 per cent of alcohol labels by 2013 Over 60% of current product labels feature unit content, sensible drinking guidelines and warning about alcohol and pregnancy Unit information and sensible drinking awareness campaign in pubs and stores Better Education Ongoing support for local community schemes. Local community pledge to support Best Bar None, Pubwatch, Community Alcohol Partnerships and Business Improvement Districts

4 European Alcohol & Health Forum. Issue in focus: Lowering alcohol content in drinks 23 March 2012 Responsibility Deal Pledge A8 Alcohol Unit Reduction As part of action to reduce the number of people drinking above the guidelines, we have already signed up to a core commitment to foster a culture of responsible drinking which will help people drink within guidelines To support this we will remove 1bn units of alcohol sold annually from the market by Dec 2015 principally through improving consumer choice of lower alcohol products.

5 Delivering on a one billion unit reduction pledge is a massive undertaking and will not be achieve solely through lowering ABV. Reformulation Innovation of lower alcohol In-store promotion House products below average ABV Packaging innovation Smaller Measures Retailer Practices The UK government introduced legislation allowing for 2/3 pint schooner glasses in October 2011

6 The context, environment and conditions exist in the UK to make the reduction pledge appropriate. Committed Partners Labelling Commitment Effective Self- Regulation Drinking Patterns eg pint culture Drinkaware foster a culture of responsible drinking which will help people drink within guidelines Portman Group Standard Units Unit Awareness Curious Consumers Willing Brands Enlightened Legislation < 2.8% tax rate 2/3 pint 1bn unit pledge Monitoring & Evaluation Unit Guidelines

7 With 35 leading producer and retailer signatories in place at launch, the unit reduction pledge is in a strong position to deliver on 2015 commitments No, low or reduced-alcohol wine category grew 24% in volume in the year to April 14 (2012) and 37% in value (AC Neilsen) Blossom Hill Vie 2 million Tastefully Done marketing campaign First Cape Café Collection 5.5% ABV GB Launch of Guinness mid-strength 2.8% Carling Zest summer & Winter range. 3.5m brand investment in 2012

8 To be successful, partners in the responsibility deal must balance the desire to celebrate unit reduction with consumers expectations of a proper drink..

9 Building lower alcohol brands is not for the faint hearted ZEST : 17 years planning, 700+ recipes & 15m investment Current UK rules don t allow for a distinction to be drawn between drinks with different strengths unless below 1.2% Enabled by the Alcohol Strategy, the Portman Group is playing a leadership role in evolving self-regulatory rules to recognise the distinctive role of lower strength drinks

10 What prevents successful marketing of lower alcohol brands? Consumers, media and even some experts struggle recognise brands with less alcohol as proper drinks. Consumer Research for C2 4% ABV beers Low alcohol beer Proper beers 5% ABV beers Light tasting beers Would you choose low-alcohol wine over the real deal? 63% of wine consumers who already buy in to the reduced alcohol wine-based drinks category describe the current offer as average to very poor in quality.

11 The 50% reduction in the duty rate for beer below 2.8% ABV has provide a significant stimulus to improve choice of lower alcohol beers in the UK. UK Beer Duty <2.8% ABV >2.8% ABV Rate per hec for each 1%

12 We will remove 1bn units of alcohol sold annually from the market by Dec 2015 principally through improving consumer choice of lower alcohol products. CHOICE vs ADDITION Public health concern is that the introduction of low alcohol products may be primarily additive and increase the number of situations in which alcohol is consumed (Lisa Jones and Mark Bellis, North West Public Health Observatory)

13 If the responsibility deal was about shrinking a market. BEER 27 million barrel UK market in 4% decline Shrinking by 1 million barrels a year Average strength is 4.2% ABV 687 units per barrel 687 million unit reduction per year billion unit reduction by 2015 Job done

14 With such a small, early market, we need time to build robust substitution data but the early indicators are that low-strength will take the vast majority of its volume from higher strength drinks in the UK Quant Test : substitution Beer 58% Cider 9% Wine & RTD 14% Total 81% Note: these figures are UK research only and do not present a picture of substitution outside of the UK market Source: SPA Future Thinking, 2011

15 In determining whether a similar commitment is feasible at EU level, it is important to understand the circumstances that have made the pledge appropriate to the UK. Helping more people drink within existing guidelines Using power of the market, not regulation, to shape choices Partnership approach : govt, retail, production Government enablers in place Commercial incentive : less alcohol, more revenue Substitution of higher strength Choice-by-choice, product-by-product policy 1 billion units is a weighty commitment by industry - the priority now is to make it easier for other producers and retailers to come on board and expand the deliverables beyond lower alcohol products

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