MyShout

As an Afghan beer is found in Barnsley, should we worry more about parallel trading, asks Tony Jennings

A recent Snifter piece about how a bottle of Budvar beer, dispatched from the brewery in Southern Bohemia to a Kabul foodservice company serving NATO forces in Afghanistan, ended up in a Barnsley bar raised a few guffaws. It's always entertaining when the typical irrationality of any bureaucratic machine has been successfully exploited by its small but clever cogs, such as a Sergeant Bilko or a Good Soldier Sjvek, to buck the system and make a few bob on the side.

Maybe that's the reason why, on the whole, our business doesn't worry as much as it should about the grey market or parallel trading. Many argue that parallel trading within the EU, which usually occurs when the price of an item is higher in one country than another, is not illegal. To oppose it, the argument goes, would be anti-competitive. So what's wrong with retailers buying parallel stock to enable them to supply drinkers with their favourite tipple at a lower price?

One thing is for certain: no retailer in recorded history is known to have passed the savings on to the consumer. Secondly, it is a breach of food labelling regulations to import a drink into the UK listing the ingredients in a foreign language (the Afghan beer carried this information in German). If the consumer finds anything wrong with the product, the problem, in the absence of a local supplier, will be dumped on the retailer's doorstep. Although superficially attractive - like the Bilkos and the Sjveks - the reality is that the parallel buyer is risking much pain for short-term gain.

I could say more about the economic pain all UK distributors importing drinks suffer thanks to parallel trading. We have to pay handling and promotional and sales charges, and be properly insured, to deal with any problems relating to the product, while the parallel trader can be likened to a person driving a car without insurance. We also have to manage back-office problems, not the least of which is exchange-rate fluctuation - inconvenient baggage the parallel pusher doesn't have to worry about. Selling off the backs of legitimate distributors, he gives nothing back to the industry. I know many readers will be hearing an imaginary violin as they read this and telling me their hearts bleed for me, so I'll stop whingeing and stick to the grey market.

It's my opinion that the upsurge in imported beers and wines has significantly expanded this market in recent years. I very much doubt, for instance, that anybody has paid any duty on the Barnsley-bound Afghan beer - but that's just a weird example we happened to hear about. I would estimate that annual drinks-related revenue fraud runs into millions.

Of course you can quite reasonably argue that it's a problem for HM Revenue & Customs and trading standards officers, not ours. I feel very strongly, however, that as an industry we have to get involved, if only for the self-serving reason that we don't want to give our ever more vociferous enemies another excuse to accuse us of yet even more irresponsible behaviour and bring yet another ton of bloated bureaucracy down on us in the process.

Tony Jennings is chief executive

of Budweiser Budvar UK