The party’s flagship policy to introduce minimum pricing on alcohol was thrown out as MSPs rejected the controversial scheme by 76 votes to 49.
It followed furious exchanges at Holyrood during which Health Secretary Nicola Sturgeon branded her opponents “pathetic” for voting against the strict measures.
But opposition MSPs voted overwhelmingly to remove “fundamentally flawed” plans to impose a minimum price per unit from the Alcohol Bill.
Tory Deputy leader Murdo Fraser said: “Despite all the assertions we’ve heard, there’s been no compelling evidence produced in support of minimum pricing as a policy.
“All we hear is reference to the widely discredited Sheffield University modelling study, which even its own authors admitted had no greater currency than the weather forecast.”
And Labour health spokeswoman Jackie Baillie said: “We oppose minimum pricing, not on political grounds, but because we do not believe it works.
“And that is a view that is shared by the main opposition parties in this chamber.”
Sturgeon reacted with fury, saying: “When we have the opportunity to save not just money, but lives, then we have a duty to listen and to act.
“That is exactly what people outside this Parliament want us to do – people who know what they’re talking about. Doctors, nurses, the police, public health experts, children’s charities, churches, key players in the alcohol industry, and growing numbers in the population all believe that this is a policy whose time has come.”
Dr Brian Keighley, chairman of the BMA in Scotland, said: “I am frustrated and disappointed that the debate on such a serious health issue has been polarised and that many opposition MSPs had made their minds up before even considering the evidence.”
The Bill also bans discount deals, such as two-for-one on bottles of wine.
In addition, it aims to curtail “irresponsible” drinks promotions and restrict alcohol advertising.