Asda Ends Below-Cost Alcohol Sales

22nd Jul 2010 15:05

LONDON (Dow Jones)--Wal-Mart Stores Inc.'s (WMT) U.K. grocer Asda Group Ltd. Thursday said it has made an official commitment to the British government not to sell alcohol below the cost of duty plus value-added-tax. "I see this as a small but important first step in the process towards creating a new way of selling alcohol in the U.K.," Asda Chief Executive Officer Andy Clarke said in a letter to U.K. Home Secretary Theresa May. The policy, which came into effect from Tuesday July 20, applies to over 99% of the alcohol Asda sells, the company said. Store managers are still able to set alcohol prices for damaged or end-of-range products. Asda also called on the industry to establish a "floor price" for alcohol, below which it would be illegal to sell. In May, Tesco PLC (TSCO.LN)--the U.K.'s largest retailer by sales and market share--said it is prepared to back the introduction of a minimum price for beer, wine, alcoholic cider and spirits, in response to government proposals designed to combat excessive drinking and anti-social behaviour. Following Tesco's stand, rival William Morrison Supermarkets PLC (MRW.LN) said it doesn't sell alcohol below cost price and added that it is ready to discuss a industry-wide commitment on the practice. J Sainsbury PLC (SBRY.LN) said it also doesn't sell alcohol below cost price, but said introducing a minimum price for alcohol would unfairly penalize its shoppers. It also said there is no reliable evidence that minimum pricing would tackle the problem of binge drinking. -By Simon Zekaria, Dow Jones Newswires; +44 207 842-9410; [email protected] (END) Dow Jones Newswires July 22, 2010 10:05 ET (14:05 GMT)