Tim Martin, the chairman of JD Wetherspoon, has launched an astonishing attack on Diageo – one of the world’s biggest suppliers of spirits – branding the company “a bunch of morons” and threatening to boycott its products (John Harrington).
The JD Wetherspoon founder’s scathing broadside came after the company called for the alcohol duty escalator to remain in place for all drinks products except spirits, a move Martin described as “anti pubs”.
The drinks supplier made the call in its submission to the Treasury’s review of alcohol taxation and pricing.
Diageo, owner of eight of the world’s top 20 premium spirit brands, as well as the iconic stout Guinness and Blossom Hill wine, called for a unit of alcohol to be taxed at the same rate for all products. This argument is known as “equivalence”.
The drinks group, led by Paul Walsh, said the “simplest way” to do this would be to freeze spirits duty. The controversial duty escalator — 2% above inflation — would be added to other categories until they reach the level of spirits.
The company said this would generate between £524m and £1.9bn a year for the Treasury, with no additional impact on the industry than will already result from the Government’s planned RPI+2% escalator and 2.5% VAT rise.
Simon Litherland, managing director of Diageo Great Britain, said: “Our recommendation to the Treasury is the fairest and most transparent way to approach taxation of alcohol. It will bring revenue to the Government and will mean that the more alcohol in the drink, the more tax it will pay.”
Martin told the Morning Advertiser, the leading weekly pub newspaper that sits in the same publishing stable as M&C Report: “I think Diageo should consult their customers more before they make these sorts of statements.
“The escalator is damaging for pubs. We feel that, as a matter of extreme urgency, tax and regulation of pubs needs to be reduced. We are paying 40% of our sales as tax. At the current time tax on a typical pint of beer in a pub that sells for £2.50 is a £1. And we’ve got a complete bunch of morons at Diageo who say it should go up — but not for them.
“Their lobbying is so transparent — that everybody else pays, but not Diageo.
“When our contract comes up for renewal, unless Diageo radically changes its tune, it won’t be renewed.”
JD Wetherspoon, which operates about 750 high-volume outlets, has annual sales of about £1bn. Diageo is one of its biggest suppliers.
In response to plans to tax “problem drinks” more, Diageo urged that ready-to-drink brands be left out, saying they’re “not the drink of choice” for underage drinkers or bingers.
Tim Martin is to speak at the forthcoming UK Pub Retail Summit, organised by M&C Report and the Morning Advertiser, in London on 16 September. He will call for a concerted campaign to change the tax policies that have led to “devastation” to parts of the pub industry. There are still some tickets available – call 01293 610324.
