5: Spirits Ready-To-Drink beverages (RTDS)

The RTD category

includes the terms of Designer Drinks; Flavoured Alcoholic Beverages (FABs); Premium Packaged Spirits (PPS); Spirit Mixed Drinks (SMD); Premixes and Coolers.

Background History

The tax rate that existed for RTDs up to the April 2002 UK Budget, was introduced by the then Government in 1988 “to encourage the development of the market for lower strength alcoholic drinks”.

Facts & figures..

Given the misleading information concerning RTDs, it is of note that in terms of pure alcohol (as compared with bulk volumes), RTDs account for less than 2% of alcohol consumed in the UK. In case there is a perception that action should be required concerning the drinking of RTDs in the 18-21 age group, it is of relevance that the largest category consumed by this age group is beer & lager, and RTDs account for less than 8%. The 65% increase in Excise duties on this sector in the 2002 Budget did little to actually solve the problem of binge drinking, which was never the reserve of this one category. RTDs are not the major cause and all the tax increase has done is to cause consumers to switch to other products. HMRC figures show a drop in spirits RTDs sales. One contributing factor has been the reduction in strength of a number of RTDs. RTDs are on average produced at a lower strength than directly competing bottled products but are significantly more expensive on a pro rata basis. It is clear that this category has been badly affected by a number of factors, the most obvious one being higher prices for spirit-based RTDs r esulting from the tax increase. The present rate of tax on spirits-based RTDs is disproportionate and anti-competitive as it has created a new form of discrimination by affording a clear competitive advantage to directly comparable and competing wine, cider and beer products.