Cross-channel booze

Three drinks hypermarkets are to be opened in French channel ports by the ferry operators, P&O. At the moment the trade in cross-channel alcohol and tobacco stands at well over £800 million a year and P&O are anxious to establish themselves in the business so as to offset the loss of revenue when duty-free ends next June. At the moment the company takes £200 million in duty-free goods every year.

Over recent years there has been a huge growth in the sale of duty-paid alcohol from hypermarkets such as Eastenders, founded by Dave West ten years ago. The major supermarket chains Tesco and Sainsbury, and the off-licence company Victoria Wine also have outlets in the Boulogne-Calais area and P&O will face tough competition from these established players.

A complicating factor is the issue of fares. The largest rise - 10 per cent is suggested - in the cost of crossing the channel for many years is expected soon. Up until now the profits from duty-free has allowed the ferry companies to subsidise fares in their own internecine price war. Of course, one result of the low fares has been to encourage cross-channel shopping. The ferry companies will have to be careful not to raise fares to an extent which will diminish the hypermarket trade just when they are entering it.

Eastenders is now a £42 million business and Mr West says, "It is very competitive over here. The mere fact that it is a P&O cash-and-carry is not going to convince people to go there without shopping around." The Chairman of P&O Ferries, Graham Dunlop, said that customers would be able to 'phone through their orders before their trip and collect them as they leave for England. The major beneficiaries of this facility, it might be argued, are the bootleggers who order in vast quantities, know precisely what they want, and like fast, efficient operation. A large part of the attraction of the booze hypermarkets to the ordinary tourist, or even the customer who is taking a day-trip to stock up on lager, is the ability to browse and make a selection on the spot.

However it is bought, so-called beer-tourism is costing the Exchequer £195 million in lost excise duty and VAT, according to an answer given in the House of Commons in July, and represents approximately 15 per cent of all alcohol bought by UK citizens in supermarkets and off-licences. In the same answer Geoffrey Robinson, the Paymaster General, informed the House that 70-80 per cent of smuggled alcohol (100 per cent for tobacco products) substitutes for similar purchases in the UK. The inference must be that the 20-30 per cent remaining constitutes additional consumption directly resulting from low prices.