§ Mr. Hattersley
This report of the Price Commission has been published today and I have arranged for a copy to be placed in the Library. The Price Commission has examined the prices and profit margins on selected soft drinks and mixers sold for consumption on licensed premises and has compared them with those on other sales. It examines the reasons for complaints by consumers and comes to three main conclusions.
First, it considers that the gross profit margin on licensed premises is higher than is justified, that some manufacturers have loaded price increases on those sizes of mixers normally sold in public houses, and that trade prices are fixed at a level which tends to lead to further rounding up. It therefore concludes that manufacturers and the licensed trade between them should be able to reduce the prices of mixers by at least 2p. Secondly, it suggests that the prices of mixed drinks such as shandy or lager and lime should be reduced to reflect more closely the cost of the constituents, where this is not already the practice. Thirdly, it comments that in some instances the prices of soft drinks sold as such are set at an unduly high level in order to discourage the trade and that this seems an undesirable practice.
There is no suggestion in the report that the overall profits of soft drinks manufacturers, brewers or licensees are in any way excessive or that they have charged more than they are permitted under the Price Code. The Commission considers that as soft drinks and mixers represent a small proportion of total sales it should be possible in most eases for action to be taken on the lines suggested without an undue effect on profits.
It does, however make an important qualification to its conclusions in relation to licensees. It points out that, in looking at profit margins on individual products, it is necessary to bear in mind the profitability of the enterprise as a 204W whole. It was not the purpose of this study to investigate the profits of the licensed trade as such. The same point is relevant for the Commission's investigation into the manufacture and distribution of beer sold for consumption on licensed premises, which I announced on 10th February.
In order to make possible a proper assessment of the overall position of the licensed trade, I have, therefore, decided to amend the terms of the reference on beer so as to include an investigation and report on the overall net profit margins of businesses licensed to sell beer for consumption on the premises.
The Commission has produced an interesting and valuable report on soft drinks and mixers. A final assessment must await its report on beer. In order to make progress in the meantime, however, I have invited comments on the present report from interested parties and I will be arranging for the conclusions to be discussed with those most concerned.