A Spirited Affair
Jane Lawson looks for cheer in the global spirits industry.
The problem with alcohol
Alcohol is no ordinary commodity. While for many of us it evokes pleasure and sociability, the harm it causes is massive and pervasive.
Beer is the third most popular drink in the world, after water and tea.(3) In the UK consumers spend more than £30bn annually on alcohol, accounting for an astonishing 5.8% of consumer expenditure.(4) That’s more than we spend on personal goods and services or power and fuel.
While many of us enjoy alcohol without problems, beneath such levels of consumption in the UK lie a 95% increase in alcoholic liver cirrhosis since 2000, according to the Royal College of Physicians, and an 18% increase from 2002-2005 in alcohol-related deaths. Alcohol consumption is responsible for 70% of peak A&E admittance. And according to the National Institute for Clinical Excellence (NICE) about one in four UK adults drinks too much – and are damaging, or at least risking, their health.
Regulating the industry
The drinks industry as a whole is closely involved in Government efforts to reduce problem drinking. However not everyone agrees that this cosy arrangement is without problems. In 2006 the Joseph Rowntree Foundation reported that, following discussions with the industry, a 2005 Government standards document for the production and sale of alcoholic drinks omitted any “obvious mechanisms of monitoring, implementation and enforcement...”(1) According to the Foundation, the industry was “opposed to policies that seek to control overall levels of alcohol consumption” and rejected “evidence linking levels of alcohol consumption to levels of harm.”
The alcohol industry spends £800m a year on advertising in the UK, 45 times more than the government spends educating people about the dangers of alcohol. Promotion is restricted by a voluntary code of practice banning advertising aimed at under-18s, encouragement of irresponsible drinking, and linking drinking with social or sexual success or with masculinity or femininity.
However, the British Medical Journal accused the industry this year of ‘pushing the boundaries’ of the code, and of using market research on 15- and 16-year-olds to guide their ad campaigns. Diageo brand Smirnoff Ice was reported to want ‘to become the most respected youth brand.’ In our Buyers’ Guides, the Irresponsible Marketing column will help identify some companies criticised in this respect.
A voluntary code of conduct is clearly not enough. According to evidence presented by Professor Michael Marmot alcohol consumption among 11- to 15-year- olds rises in line with increases in expenditure on alcohol advertising.(2)
Marmot attributes the increasing problems with alcohol consumption to the fall in the relative price of alcohol (which relative to income has halved since 1960), the removal of restrictions on alcohol sales, and increased promotion by the alcohol industry.
The latest advice from NICE about how to tackle problem drinking includes: a possible ban on all alcohol advertising to protect children; a reduction in alcohol licensing hours; and a minimum national price per unit of alcohol.
The Scottish government recently rejected a proposal on minimum pricing, as has the UK Coalition government. The drinks industry claimed it would unfairly target the poorest families. The Institute of Fiscal Studies (IFS) calculated a 45p minimum unit price (as suggested in Scotland) would cut consumption of shop-bought drinks by almost 25% in households with incomes below £10,000. But only 12% for those with incomes over £60,000.
And minimum pricing, warned the IFS, would hand millions to retailers while reducing tax revenue. The ‘social cost’of alcohol in the UK, in ill health, crime, and social problems has been estimated at £20bn annually – while alcohol taxes provided £13.26bn.(13)
With alcohol consumption as old as civilisation itself we clearly can’t lay all of its associated harms at the door of industry. But nevertheless, society as a whole is arguably subsidising the harm associated with a highly profitable industry.
1 Alcohol strategy and the drinks industry: a partnership for preventions? Rob Baggott, Joseph Rowntree Foundation, December 2006.
2 How Can We Reduce The Burden? Michael Marmot, Presentation at the Royal College of Physicians, 13 November 2007.
3 The Institute of Alcohol Studies study 2008; revenue figures for 2004.
They’d like to teach the world to drink...
As well as catering for the Western consumer most companies are merrily exploiting new markets in developing countries, especially China where both the economy and sales of alcohol continue to grow. Rémy Cointreau’s 2009 Annual Report describes, “Formidable growth in new countries, especially Asia”, which now accounts for over 50% of the cognac market. China has become Rémy Martin’s leading market, while the company even describes Vietnam as a market with great potential. Bacardi sees the development of the Dewar’s brand in China as a priority; promotional tactics have included themed parties and an ‘Academy of Whisky’.(8) Brown-Forman expects Brazil, Russia, India, and China and other emerging markets to gain significantly in importance.(9) Halewood International has a joint venture in China,(10) while Pernod-Ricard lists India and China amongst its most dynamic markets, and claims to be the number one-ranking international spirits company in China, Mexico, India and Russia.(11)
As well as exporting alcohol-related problems, the industry doesn’t appear to be doing as much as it could to tackle supply chain issues closer to home. Fortune Brands (owners of the top-selling UK brandy Courvoisier Cognac), LVMH and Bacardi have all improved their Supply Chain Policy marks since we last covered them, but Pernod-Ricard still scores badly and none of the big companies receive our top rating.
Make your own?
It is illegal to distil your own spirits in the UK without a licence from Customs and Excise, but you can add a little something to the spirits you buy. It’s easy to make a special present by infusing shop-bought alcohol with extra ingredients – the classic example is sloe gin, made by adding sloes (the fruit of the blackthorn tree) and sugar to gin and letting them infuse for three months, shaking every week or so. Sloes are usually ripe around October or November. The same method can be used to make damson vodka or gin. If this doesn’t leave time to make a present for this Christmas, there are other combinations that don’t require as long. Good options include vanilla pods in vodka, slices of root ginger in rum, chili in tequila, dates in brandy – you can use your imagination. For most of these, a couple of weeks will be enough to add flavour – but keep testing until it tastes right!
Greenall’s gin is owned by AHG Venice Ltd which is half owned by Lloyds Bank, hence the majority of its marks on the table.
Bacardi & Company is subject to a boycott called by Rock Around the Blockade for the company’s role in “undermining the Cuban Revolution”.(16)
Brown-Forman has publicly stated that it has started to use GM corn for some of its distilling.(17)
CL Financial Group bought Lascelles De Mercado & Co Ltd, owner of the Appleton Estate brand, in 2008, incurring US$340 million in debt. CL Financial Group was subsequently bailed out by the Trinidadian government and central bank.(19) The company group receives an Animal Testing mark for producing pharmaceuticals without having an animal testing policy.
The Edrington Group, owners of Famous Grouse, is owned by Scottish charity The Robertson Trust. The company has helped raise £100,000 for the RSPB Scotland through sales of its Black Grouse whisky.For every bottle sold, RSPB Scotland receives 50p.(20) In 2009 The Edrington Group piloted a carbon capture demonstrator project, capturing carbon dioxide from the distillery’s boiler exhaust and percolating it through algae reactors to convert it into protein and vitamin rich animal feed.(21)
Guy Pinard was the first company to produce organic cognac, in 1969, after the owner observed health problems in agricultural workers, especially with grape pickers. The Pinard family has owned its vineyard for more than 300 years.(22)
The LVMH Group, which owns a number of luxury brands, receives a mark in the Animal Rights column for the retail of fur by subsidiaries such as Fendi, Loewe and Marc Jacobs.(23)
The spirit for the vodka and gin produced by the Organic Spirits Company, owned by London & Scottish International Ltd, is biodynamically certified by Demeter.(25)
Pernod-Ricard receives an Animal Rights mark for sponsoring the Scottish Elephant Polo team.25
Speymalt Whisky Distributors’ Benromach whisky is made using only Scottish barley, and the entire production process ‘field to bottle’ all takes place within 20 miles of Benromach Distillery.(26)