Spirits will be hit hardest by minimum alcohol pricing

By Nicholas Robinson

- Last updated on GMT

Hard hit: spirits will feel the wrath of minimum alcohol pricing most
Hard hit: spirits will feel the wrath of minimum alcohol pricing most

Related tags Minimum alcohol pricing Minimum pricing Alcoholic beverage Distilled beverage Drinking culture

Spirits will be hit the hardest out of all alcohol categories following the Scottish government’s announced plans to back minimum alcohol pricing.

A minimum of 50% of alcohol sold in Scotland will not meet the impending legislation, which was given the go ahead by the Scottish​ government last month, according to research by data firm Nielsen.

The government’s vote to change the rules on alcohol pricing in Scotland is in an attempt to quash alcohol-related illnesses and diseases in the country.

Spirits will be hit hardest, with 69% of the most popular brands sold in Scotland coming in below the 50p per unit threshold set to be enforced by the government.

Beer is the next most impacted category, with 67% of brands not meeting the regulations, followed by cider at 51%. However, just 3.5% of wine sales will be impacted.

‘Most popular spirits’

Nielsen senior client manager Marika Praticó said: “When looking at the top 50 selling products in each category, instead of total volume sales, 76% of the most popular spirits don’t meet the minimum pricing, compared with 74% in beer, 54% in cider and 12% in wine.”

Out of the spirits category, blended Scotch and vodka will be impacted most by minimum pricing legislation. Blended Scotch, overall, will see prices rise by 20% and vodka 16.3%, Praticó added.

However, the analyst pointed out that enforced price rises wouldn’t necessarily be bad for the spirits industry.

“In fact,” she said. “It could result in increased revenue, as long as demand doesn’t fall beyond a certain tipping point.

“This ‘break-even’ figure is 12.5%, as long as any potential decline in demand doesn’t exceed this the industry will benefit, thanks to the higher price point.”

Should demand fall below the 'magic number', revenues will start to decline, she added.

Trade up to premium brands

Another positive could be that consumers are more likely to trade up to more premium brands, which would, however, have a negative impact on entry-level products.

The ruling to introduce minimum pricing in Scotland sparked anger from the Association of Licensed Multiple Retailers’ (ALMR) chief executive Kate Nicholls, who argued it would restrict trade and that such a move should be evidence-based.

“The Scottish government has introduced minimum unit pricing without providing conclusive evidence that the policy will lead to a reduction in consumption of alcohol and a reduction in alcohol-related harms, which ultimately is its aim,” Nicholls added.

“The ALMR has repeatedly pointed to falling levels of alcohol consumption and a shift in drinking habits, which favours unsupervised drinking of off-trade alcohol that can be bought very cheaply.

“This year, we have seen beer sales in the off-trade overtake beer sales in the on-trade, and yet pubs and bars will still be forced to bear this indiscrimination of a financial burden and additional, unnecessary level of bureaucracy.”

Related topics Spirits & Cocktails Legislation

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