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November 12, 2006 The Sunday Telegraph Drinkers in for a merrier Christmas than ever Consumers set to pay less for alcohol and cigarettes but retailers fear high street slump BY RICHARD GRAY AND GETHIN CHAMBERLAIN AS MUCH a part of Christmas as turkey and the Queen's speech, the annual "booze cruise'' across the Channel has for many Britons been the only way to stock up on cheap drink and cigarettes without offering an involuntary seasonal gift to the taxman. But this year drinkers and smokers could be celebrating early, thanks to a European Court of Justice ruling which is expected to sweep away customs duty for stay-at-home shoppers. If the court accepts the advice of its own advocate general next week, the only journey they will need to make in the future will be on the internet. The Sunday Telegraph can reveal that wine merchants and delivery firms across Europe are already gearing up for new business in anticipation of the ECJ ruling on November 23. P&O Ferries stands to lose out if the rules are relaxed, because of a decrease in the number of people making day trips to the Continent to stock up on wine and cigarettes. But it plans to compensate for the loss of business by providing a delivery service for orders placed over the internet and by mail order. P&O Ferries claims that it can use its existing freight infrastructure to provide the third-party delivery service that would be required for British residents to avoid paying duty on their goods when they enter the country. A spokesman for the company said: "We have large ships going across to mainland Europe and we have a large warehouse and transport operation. We could find ourselves being able to offer a more door-to-door service for our customers.'' Although it is too early for companies to say how much they may charge to deliver imported alcohol and cigarettes, fees are expected to be broadly in line with present internet delivery costs. Wine clubs in Britain deliver cases of wine to their members' doors for about pounds 5 each. Wine merchants based in mainland Europe are also clamouring to set up internet and telephone ordering services that will allow their customers in the UK to take advantage of the ruling. Simon Delannoy, the owner of an Oddbins franchise store in Coquelles, Calais, said that they were intending to set up an internet sales business if the ruling allowed them. "We would certainly have to jump on the bandwagon,'' he said. The prospect of cheap imports being delivered directly to customers' doors has alarmed some sectors of the UK retail industry. Many shops and dealers believe that they will lose vital business to foreign merchants and websites that are able to provide heavily discounted alcohol and cigarettes because of the high duty charged in Britain. A spokesman for the British Retail Consortium said: "We support an international market and free, cross border trade, but this requires a level playing field. "When it comes to alcohol and cigarettes we have anything but a level playing field here in the UK due to the duty that is applied.'' At present, Britain levies pounds 1.29 in excise duty on a 75cl bottle of wine, the second highest rate in the European Union after Ireland. In 12 EU countries including Germany and Portugal, the excise rate on wine is zero, while in France it is less than 2p. Britain also has the second highest excise duty rate on spirits (after Sweden) at pounds 5.48 for a 70cl bottle, around twice the rate in France and Germany. According to figures from the Tobacco Manufacturers' Association, the disparities between cigarette prices are even larger. Britain has Europe's most expensive cigarettes, at an average of pounds 5.23 for a pack of 20, of which pounds 4.03 is tax. The number of people travelling to Europe to take advantage of lower alcohol and tobacco prices has been falling in recent years, with an 11 per cent drop in passengers passing through the Port of Calais from Britain in 2005 compared to 2004. Despite that, official figures from Calais show that almost 11.7 million still made the journey across the Channel. Locals in the French city now fear that a change in the excise regime will reduce the vital trade from British shoppers further. Stephen Coleclough, the chairman of the fiscal committee of the EU tax advisory body Confédération Fiscale Européenne, said that inevitably there would be winners and losers. "Either you have a working single market or you don't. This could be bad news for the exchequer but good news for consumers.''
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