Drinks giant predicts fall in spirits

Date: 31/07/1997

COMPETITION watchdogs may be probing the proposed merger between Guinness, the UK-Irish stout and spirits company, and Grand Metropolitan, but it is the duty free issue which remains top of the agenda for some company executives.

Guinness, which took over a raft of whisky companies from Distillers, says the disappearance of duty free would be the equivalent of wiping a mid-sized European market off the map for all producers.

“It would be something like removing a market in between that of the Netherlands and Germany - something like the ninth or tenth biggest market in the world,” said the company's head of European affairs Chris Scott-Wilson.

That estimate takes into account the continuance of duty-free sales for all journeys between the EU and third countries - roughly one-quarter to one-third of all duty-free sales.

According to initial industry estimates, the EU duty-free market in all spirits is worth around 250 million ecu a year.

Guinness claims the idea that replacement markets exist to fill the gap left by duty free is a myth.

The company argues that there is no likelihood that former duty free spree buyers will switch and make equivalent purchases of spirits on their domestic markets once it has disappeared. “We genuinely believe it is a unique purchase,” added Scott-Wilson.