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French cure for whisky hangover.

THE ending of duty-free sales in Europe could be a blessing in disguise for the Scotch Whisky industry...

Even though it's unlikely to see things that way.

It could even confound the theory that the loss of duty-free sales would lead to 200 job losses.

Duty-free shopping in Europe finished at the end of last month, leaving a potential lost market of pounds 136 million in EU sales.

Total duty-free sales were in the region of pounds 220 million annually.

The difference is the amount of duty-free Scotch sold to those travelling though Europe to another country, who can thus continue to take advantage of cheaper prices.

The potential benefit for whisky producers lies in the anticipated jump in cross-border shopping which the cutting of duty-free sales may stimulate.

In France, the world's third most valuable export market for Scotch after America and Spain, you can still buy a litre of whisky for around pounds 10, the same price as you would have paid in a duty-free shop. Here it costs around pounds 15 to pounds 16.

But now it seems likely that those nipping across the Channel for their Scotch are more likely to buy in bulk, rather than a single duty-free bottle.

One recent survey suggested nearly one in 10 consumers was planning a trip to France to stock up on alcohol for the millennium celebrations.

An industry observer said: "I also think people are more likely to trade up from 70cl bottles to litre bottles so that will increase sales by about a third."

So having been staring at a lost market of pounds 136 million, it now seems possible Scotch whisky distillers could be looking at an increase, thanks to the ending of duty-free sales and to the vast differences in duty within the EU.

With very few exceptions, Scotch is cheaper abroad than here.

Cheapest of all the EU markets are Spain and Italy, where a 70 cl bottle of Scotch costing pounds 10.70 in Britain will set you back only pounds 4.90.

In Germany it will cost pounds 6.90 and pounds 7 in France. But as France is the most easily reached from south of the border, it seems likely that sales there could be set to rise substantially.

And they could be boosted by the evidence so far that most people are going to celebrate the millennium at home.

Campbell Evans, of the Scotch Whisky Association, points out that France is already an important market for Scotch, worth some pounds 213 million annually.

But he says that it is too early to judge the impact of the ending of duty-free sales on cross-border sales.

He argues that different prices show that there is a long way to go before we achieve a single market in Europe.

And it reinforces the need to reduce excise duty in the United Kingdom.

He says: "Cross-border shopping merely exports jobs and revenue to French coffers.

"That's why we've been telling Chancellor Gordon Brown we want a strong home market."
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Copyright 1999 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Sport
Author:Millar, Bill
Publication:Sunday Mail (Glasgow, Scotland)
Date:Jul 18, 1999
Words:505
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