Minimum pricing

Published by Sally on January 8, 2010

A version of this first appeared in Australian publication Grape Growers and Vignerons in May 2009.

In light of the Health Select Committee’s report this week calling for minimum pricing for alcohol and further restrictions on the advertising of alcohol products, the article remains current, and has not been updated.

The chief medical officer made headlines recently with a proposal of £0.50 minimum price per litre per unit of alcohol, which in England and Wales was quickly rebuffed by the prime minister who said he didn’t want to penalise the responsible majority.  But Scotland, which has the power to decide its own policy, is driving forward with its plans for minimum pricing in its bid to counter binge drinking. The proposal is part of a new Health Bill to be debated later this year.

A £0.50 per litre per unit of alcohol minimum price would add more than £3.50 to the average price of a bottle of whisky in Scotland (36% more expensive).

Work done for the government by the University of Sheffield showed minimum pricing would reduce overall consumption, but, said Gavin Partington, head of communications for the Wine and Spirit Trade Associaion (WSTA), which represents the whole of the wine and spirit supply chain “it does not show such a policy would target so-called binge drinkers. In fact a growing number of politicians accept that minimum price is a blunt weapon that would put prices up for the majority but fail to target those who have the problem.” Which may explain Gordon Brown’s immediate distancing of himself from the proposal.

Partington went on: “In fact levels of alcohol consumption in other Northern European countries such as Sweden, Finland, Ireland, where taxes on alcohol are very high, suggest that price may do little to deter those who are determined to consume alcohol to get drunk”, adding “proponents of minimum pricing have never adequately explained why it is those countries with low or zero taxation on alcohol and hence low prices, where there is far less of a problem with alcohol misuse.”

Everyone agrees binge-drinking needs to be tackled, but the evidence suggests this group of people is least influenced by rising prices. Indeed the government’s own Sheffield research found hazardous and harmful drinkers to be less sensitive to higher prices than moderate drinkers, in terms of their total alcohol consumption.

A different piece of work by the Centre for Economics and Business Research found “that if minimum pricing at 50 pence per unit was introduced in the UK, consumers would end up paying almost £1.8 billion per year more for alcohol products – the equivalent of £68 per household per year.” And that “the savings to wider society including NHS and policing costs, and costs to victims of crime would be around £200 million per year.”

The particular issue for Australian, and other southern hemisphere wines is their typically high alcohol content.  A 14.5% Aussie shiraz would cost about £5.40, but a 12% Italian white, only £4.50.

It is thought that minimum pricing would be illegal under EU competition law. Partington said: “We believe minimum pricing runs counter to both UK and European competition law though the Scottish Government continues to insist it is legally permissible.  It is impossible to get a definitive legal view until the Government has specified the legislative means by which it intends to introduce minimum pricing.”

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