How minimum pricing might increase alcohol consumption

By Phil Mellows

- Last updated on GMT

Related tags: Minimum pricing, Alcoholic beverage

How minimum pricing might increase alcohol consumption
It’s worth asking, now the government has launched the consultation process around its proposals for a 45p minimum unit price for alcohol, how it’s going to work in the real world.

On the same day the consultation was launched in England and Wales, the European Commission came back to the Scottish Government on its own plans for a 50p minimum. As reported by solicitors Balfour & Manson​, the EC would regard the measure as illegal. More interesting is why.

Of course, it’s an impediment to free trade, but that need not matter if the potential health benefits can be proven. No doubt the commissioners ploughed through the Sheffield University modelling study. And, not surprisingly for some of us, they weren’t convinced. But they had something to add:

“MUP will create greater incentives for retailers and supermarkets in particular to sell more alcoholic beverages as a result of the fact that they will make higher margins on products affected by the policy.”

So minimum pricing could end up contributing to an increase in alcohol consumption. The thought did cross my mind a while back when I was researching the impact of the measure on own-label drink. Supermarkets understand consumer behaviour better than anyone, and they have the resources, the scale and an array of marketing strategies they can manipulate to maximise their sales and profitability.

This is where looking to Canada for evidence​ that minimum pricing works falls flat. The states where it has been applied operate government alcohol monopolies. Policy and outcome are joined up. A measure will be implemented in such a way that it has the best chance of achieving the result you set out to achieve.

But once you chuck a policy into a marketplace, private enterprise will work with it in such a way that it will cause least damage to its business. It might even turn it into a sales opportunity. I’m not sure Sheffield has modelled that.

The other problem with implementation has been picked up by Damian McBride* (yes, that​ Damian McBride). He simply asked how minimum pricing was going to be enforced and discovered that it’s pretty much going to be left to members of the public to blow the whistle on booze with a 44p per unit price tag – once they’ve made the necessary calculations, obviously.

So while it’s likely that major retailers will keep their noses clean and follow the rules, corner shops might spy an opportunity to get one over on supermarkets and take a chance. After all, their customers are unlikely to grass them up. They’re benefiting and, as research has demonstrated​, they enjoy a close, mutually supportive, relationship with their local shopkeeper.

The same research also shows that those local shops are in favour of minimum pricing. Good luck to them, I say.

*I don’t agree with his conclusion that higher taxation is the answer, by the way, big supermarkets can, and have, absorbed duty hikes by shifting their margins around different product categories.

Related topics: Legislation

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