`Cheap' deals that were never much of a bargain

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The Independent Online
DUTY FREE used to be a byword for bargains, but a new survey by The Independent shows that careful high-street shopping can equal or even surpass the VAT-free perk.

For years, the prices yielded by duty-free shopping were a luxury enjoyed only by travellers and bulk-buy businesses, but Britain's retailers have been fighting back to increase their market share.

While the Duty Free Confederation argued the case for its retention, and airport and ferry companies raised the spectre of job losses, high- street names such as Tesco and Sainsbury's set up abroad with other cash- and-carry outlets to tap the lucrative market for cheap cigarettes and alcohol.

And with the expiry of duty-free this week, our survey shows just how far the retail trade has converged. As well as ongoing high street competition between the big supermarkets and cut-price cash-and-carry stores, a host of English companies have set up shop in Calais, Cherbourg, Le Havre, Zeebrugge and other ports to take advantage of British "booze cruises".

Travelling on a P&O Stena ferry to Calais yesterday, a passenger could buy a litre of Smirnoff vodka for just pounds 9.99. At a London branch of Tesco, he or she could have picked up the same amount of vodka forpounds 10.39. For a litre of Gordon's gin, a Tesco customer would only have been 44p worse off than a duty-free purchaser - the price on the Channel ferry being pounds 10.25 compared to pounds 10.69 at home.

Duty-free goods do still yield huge savings for smokers, largely because of the high tax on cigarettes. A passenger flying out of Heathrow yesterday who bought a pack of 200 Benson and Hedges Special Filter would have paid pounds 16.99 compared to pounds 35.99 in Tesco.

But even that kind of saving is now being matched by a host of specialist bulk-buy retailers who have set up in Calais and beyond. Eastenders, with branches in Calais and Zeebrugge, now has a turnover of almost pounds 110m a year thanks largely to the "booze cruisers".

It regularly matches ferry prices and even undercuts on tobacco. Yesterday a case of 24 440ml cans of Stella Artois on the P&O Stena ferry cost pounds 11.95; at Eastenders, the equivalent cost pounds 9.25. And while the ferry offered 250g of Golden Virginia rolling tobacco at pounds 13.95, the Zeebrugge branch of Eastenders undercut it at pounds 9.65.

It is further ammunition for the Consumers' Association and high-street retailers such as Asda who have argued the case for intelligent consumerism.

A Consumers' Association spokeswoman said: "We have long-maintained that the prices in the so-called duty free market are over inflated. Duty-free is a false saving that can be easily replicated by the high street. Much of the hype about it is myth."

BAA, the airports operator, unveiled plans yesterday effectively to subsidise prices at existing duty-free levels despite the perk's abolition. Initial estimates put the costs to be borne by the shareholder at around pounds 40m, although this will be mitigated by levying an increased charge on the airlines of up to 26p per passenger.

BAA is hoping the new strategy will keep travellers spending in departure lounge shops until it can transform the business into high-volume sales with low profit margins. It plans to open more shops in the next 18 months with an extra 150,000 sq ft of retail space, backed by pre-order and pre-pay Internet home shopping.

Meanwhile Asda plans tolaunch its own line of "duty-free-style prices". The company is expected to announce a branded line of low-price products, such as perfume, that undercut BAA and the ferry companies.