Diageo in firing line over alcopops

DIAGEO, currently defending a class action lawsuit in America alleging it marketed alcopops to under-age drinkers, is now also under attack in Germany where lawmakers want to slap a so-called 'sin tax' on the drinks.

Berlin's drugs commissioner Marion Caspers-Merk has parliamentary support for a bill to go before the legislature early next year that would impose tax on a wide range of alcopops.

The German parliament is expected to vote on the bill early next year and it could be in force by the summer.

'This [bill] is specifically because of the dangers they present to children,' she says. 'Alcopops are a dangerous starter drug because they contain so many sweeteners you can hardly taste the alcohol. But it is there and is leading to intoxication among youngsters.'

Diageo denies this. In defending the US lawsuit, the firm contends it 'directs its advertising and marketing to adults' for its portfolio of these drinks, including Archers and Smirnoff Ice - the best-selling alcopop in the world.

However, any 'sin tax' would be closely monitored by Brussels and could become a European Union-wide mandate, reckons Tilman Seewald, a food and beverage analyst in Frankfurt.

'If this is being aired publicly then it is three-quarters of the way to becoming law. The alcopops issue has been bubbling, if you will pardon the pun, for some time in Germany.'

In the UK, sales of alcopops are worth more than £1bn a year and have also attracted criticism that they encourage under-age drinking. On average, such drinks contain about 5% alcohol - the same as beer.

When the alcoholic lemonades Two Dogs and Hooch arrived on the UK market in 1995, they and the imitators they spawned prompted criticism so vehement that the Portman Group, the drinks industry's self-regulatory watchdog, compiled a voluntary code prohibiting companies from targeting under-age drinkers.

At that time, a majority of alcopops were thought to be consumed by children.

Now, so-called second-generation drinks - such as Smirnoff Ice and rivals such as WKD, Reef and Bacardi Breezer - which are seen as more sophisticated than the first wave of alcopops, have revitalised interest and led to the taxation calls.

What worries the German government is increasing statistical evidence that consumption of these drinks among children as young as 12 is rising across the country.

A number of European countries already impose taxes on alcopops in an effort to confine consumption to legal- age drinkers.