Alcohol Price and Consumption

From Powerbase
Jump to: navigation, search
Alcohol badge.jpg This article is part of the Spinwatch public health oriented Alcohol Portal project.
FirstAid.png This article is part of the Health Portal project of Spinwatch.

Alcohol Pricing

In most countries alcohol is subject to taxation. Historically this has been an important means of raising revenue for the state. The relationship between the price of alcohol and subsequent rates of consumption are clear. Quite simply as the price of alcohol falls consumption increases and when alcohol prices increase consumption lowers.

Alcohol duty has in some countries been used as a public health measure but usually the tax levied on alcohol is purely a revenue raising mechanism. Furthermore, the real price of alcohol has decreased in many places as governments have not increased tax levels in line with rising standards of living.[1] According to Scottish Health Action on Alcohol Problems (SHAAP) alcohol has become dramatically more affordable:

“Between 1980 and 2005 the price of alcohol increased by 22% more than prices generally. However because disposable income has increased by :97% in real terms (Between 1980 and 2005), alcohol was 62% more affordable in 2005 than in 1980” [2]

The increased affordability has been a contributory factor in escalating rates of consumption and, in turn, rates of alcohol related harm. Therefore establishing a minimum price for alcohol is regarded by public health experts as one of the most important components of a robust alcohol control strategy. (Edwards 1994; Babor et al 2003; 2010; Anderson and Baumberg 2006). Increasing the price of alcohol alone will not eliminate alcohol related harm form but it does comprise a substantial element of effective alcohol control.

The link between the price of alcohol and subsequent rates of consumption has received a great deal of attention from researchers. Three reviews of research evidence (cited in Babor 2010 pp 112) of econometric studies from a wide range of countries all uphold the position that “alcohol demand is price responsive, inelastic and varies between beverage categories” [3] [4] [5] [6]

Scotland: Minimum Unit Pricing

Scotland does not have jurisdiction over alcohol taxation this is controlled by the Westminster government in London. The SNP recognised the need for action on alcohol in Scotland and on since coming to power in 2007 have subsequently set about establishing a minimum price for alcohol on public health grounds. The Scottish Parliament has now passed legislation to allow them to proceed with the introduction of a minimum price for alcohol among other measures. The struggle to improve Scotland’s health in relation to alcohol however looks set to continue with the alcohol industry geared up to challenge the legality of the policy under European law that is notorious pro trade. The alcohol industry is, unsurprisingly, fiercely opposed to any policy measures that they perceive as a threat to their commercial interests. The threat of minimum pricing to the alcohol industry mobilised the industry and its friends and propelled then into a well organised heavily financed strategy to avoid introducing a minimum unit price for alcohol

Alcohol Industry and the Pricing debate

The way in which the debate over minimum pricing has been shaped is interesting, the debate, largely controlled by large alcohol producers relies on regarding price increases as a punishment on the majority as a result of the irresponsibility of the minority. The alcohol industry is able to enlist the support of several right wing think tanks, other businesses such as advertisers and sponsorship agencies, the fast food industry supermarkets and certain sectors of the media to frame the debate as an infringement on freedom of choice for individuals. This is a populist and common sense argument that demonstrates a misrepresentation (often a deliberate misrepresentation) of the nature of alcohol related harm, consumption patterns and ultimately how individuals behave and in turn how society functions.

It is important to recognise that there are some alcohol producers, mainly small independents, who are not opposed to setting a minimum price for alcohol. Many small firms are more concerned with the quality of their products and the way that people enjoy them rather than being focused on volume of sales that drives multinational corporations.

Scotch Whisky Association

The Scotch Whisky Association (SWA) is fiercely opposed to the introduction of minimum pricing per unit of alcohol which is supported by the public health community and the Scottish Government. SWA have been at the forefront of challenging the proposed legislation in Scotland. They claim that under European Law imposing a minimum price is against economic competition law and use the example of the European Court's rejection of the implementation of a minimum price for tobacco in France, Austria and Ireland. [7] As the SWA will know the European Court is not bound by previous rulings and therefore if it can be convinced that the measure is a step towards improving public health it may well rule in favour of minimum pricing. The Scottish Labour Party echoed the calls of the SWA and asked the Scottish Government to state the legal basis for their plans to protect public health. Then shadow health spokesperson for Labour Cathy Jamieson said: "We have always said that the legal basis for the SNP's minimum pricing policy needed clarification." [8]

The Scotch Whisky Association has been one of the key alcohol industry organisations lobbying against the introduction of a minimum pricing for alcohol, together with the Wine and Spirits Association and the British Retail Consortium. The Scottish Government published a bill in November 2009 that contained plans to reduce overall consumption of alcohol in Scotland by a range of measures including the proposed minimum price per unit of alcohol. Weeks before the bill was published the SWA invited public affairs and lobbying companies to support their opposition to the inclusion of minimum pricing. An internal SWA document voiced concerns that the step to improve public health in Scotland would have a negative impact on international sales. [9] According to Bryan Christie, writing in the BMJ:

The Scotch Whisky Association’s document says that “a more assertive and populist message is now thought to be necessary with the clear objective of securing the absence of minimum pricing in the Bill and from the final Act.” It says that the key audiences are the media, consumers, and trade, “with the objective of removing any popular and political support for minimum pricing.” [10]

Useful Links


  1. Babor (et al 2010) Alcohol No Ordinary Commodity, 2nd edition, Oxford University press, England ISBN 978-0-19-955114-9
  2. SHAAP 2007:11 Alcohol: Price, Policy and Public Health
  3. Babor (et al 2010) Alcohol No Ordinary Commodity, 2nd edition, Oxford University press, England ISBN 978-0-19-955114-9
  4. Rabinovich, (et al. 2009) The affordability of alcoholic beverages in the European Union Understanding the link between alcohol affordability, consumption and harms RAND Europe
  5. James Fogarty, (2006) The nature of the demand for alcohol: understanding elasticity British Food Journal, Vol. 108 Iss: 4, pp.316 – 332
  6. Gallet, C. The Demand for Alcohol: A Meta-Analysis of Elasticities Australian Journal of Agricultural and Resource Economics, Vol. 51, No. 2, pp. 121-135, June 2007
  7. Scotch Whisky Association 22nd October 2009 Minimum Pricing Illegal European Court Rules accessed 23rd February 2010
  8. BBC News Scotland 22nd October 2009 Court ruling on minimum pricing accessed 23rd February 2010
  9. Bryan Christie 2009, Fear of minimum alcohol pricing spreading to other countries led to opposition in Scotland BMJ 2009;339:b5339 accessed 17th March 2010
  10. Bryan Christie 2009, Fear of minimum alcohol pricing spreading to other countries led to opposition in Scotland BMJ 2009;339:b5339 accessed 17th March 2010