The European Court of Justice (ECJ) said it considered the proposal in Scotland would significantly restrict the market, and there were other tax options available to increase alcohol prices.
The trade has welcomed the ruling, adding that MUP is not a fair means to tackling alcohol misuse.
SpiritsEUROPE director general Paul Skehan said: "Clearly there are other measures available and, therefore, this MUP proposal should be dropped. We welcome the clarification of this important principle since it affects every Member State. We welcome the ECJ ruling. This is an early Christmas present for moderate drinkers everywhere, who already pay astronomical levels of tax on each sip they take."
British Beer and Pub Association (BBPA) chief executive Brigid Simmonds agreed, and said: "MUP risks penalising responsible drinkers by increasing costs to consumers. Alcohol consumption has fallen 19% since 2004, and indicators of harmful drinking and alcohol related violence are also falling.
"In tackling alcohol-related harm, it is education and awareness, alongside partnerships between industry, local communities, police and the public health authorities that delivers the most effective results."
The BBPA said it has been very active in its support of the Responsibility Deal, which has removed one billion units of alcohol from the market as well as raising unit awareness, providing consistent labelling and promoting lower strength products.
Association of Licensed Multiple Retailers chief executive Kate Nicholls added: “The decision by the European Court of Justice provides us with some degree of clarity and we are pleased to be working towards a conclusion on the issue.
“Measures that stall or avoid the introduction of minimum unit pricing are welcome but this is likely to be undermined should additional tax burdens be placed on pubs and bars. We have consistently said that we would like to work with both national and local authorities and we urge the Scottish Government to investigate partnership schemes and work with the sector to tackle alcohol-related harms instead.
“The ALMR has always argued that minimum unit pricing alone is unlikely to prove useful in tackling government health objectives but would increase the burden on licensed hospitality businesses. If the Scottish Government is committed to tackling any perceived health harms due to alcohol, then a better course of action would be to focus on controlling unrestricted off-trade promotions.”