A G Parfett & Sons Limited is a Private Limited Company operating cash and carry warehouses in the North West of England supplying independent retail stores and caterers with goods for re-sale. The company operates five depots and is in the top 10 of UK cash and carry companies. In the last financial year turnover was approximately £193 million.

  The registered customer base of the company is in excess of 12,000 retailers and 5,500 caterers and the focus of the business is very strictly based upon supplying the trade.

  I should like to submit evidence to illustrate the effect of Bootlegging, Smuggling and Duty fraud on our compliant business since the advent of the single market in 1993. Conclusions can be drawn as to the effect on my customers businesses, which are classic small businesses.

  I intend to look at the Super Strength Lager market as follows:

—  as a whole;

—  in my business;

—  relative to the whole Take Home beer category.

  1.  Super Strength Lager was a particularly important area for Independent retailers—their share of this market has always been much higher than their share of the total beer market. Distortion of this market therefore has a disproportionately severe effect on small businesses.

  2.  Compounding this effect, customers for smuggled or bootlegged goods are more likely to be customers of independent stores because of the cash nature of the business, and the social class of the typical customer base.

  3.  "Checkout" magazine is a respected part of the trade press, and publishes an annual table of the UK's Top 100 Off Licence Drinks Brands.

  *League table position in top 100 all alcoholic drinks
 **League table position versus other Beer brands
***Sales value of brand at retail prices

4.  The above data shows that sterling sales of the two dominant brands in the super strength category have declined by 5.3 per cent in the case of Carlsberg Special Brew, and 7.6 per cent in the case of Tennents Super.

  5.  The corresponding sales pattern in the Stockport depot of Parfetts Cash & Carry (the biggest depot for beer sales) are as follows;

  6.

  7.  During the years used for illstrative purposes the total sales of Beer, Lager & Cider in this depot were as follows:

  7.  It can be seen that these figures are relatively more stable, and showing some growth. The growth would have been substantially more, as it has been in other areas of the business, had it not been for Bootlegging.

  8.  It is my belief that the above figures clearly demonstrate a dramatic loss of sales due to Bootlegging. It should be pointed out that these products show the effect on the Super Strength category (the most lucrative beer category for the criminal), but the effects are similar across every area of licenced & tobacco trade.

  9.  Areas of trade most affected include (in addition to the above) premium beers, wines (particularly volume selling "commodity" wines such as Liebfraumilch), spirits, hand rolling tobacco and, increasingly, cigarettes.

  10.  These issues are having a severe and increasingly fatal effect on the viability of small independent convenience stores. These stores provide a vital service to communities, particularly the less advantaged in society, and are already under tremendous pressure from the ongoing onslaught of the Multiple retailers.

  11.  Loss of the Grocery market to these multiples means that these two categories (tobacco & take home drink) are the essential key to survival of these independent stores. The additional & unseen losses of VAT, National Insurance, Personal & corporation tax have not been quantified, but are growing all the time.

  12.  Whilst the efforts of HM Customs & Excise are appreciated they are demonstrably failing to solve this problem. The longer it persists the more deeply rooted the criminal element become in this area of business, with potentially disastrous social consequences. The only effective solution is the harmonisation of duty rates if we wish to be part of a single market.

1 October 1999