Alcohol Price and Consumption

This article is part of the Spinwatch public health oriented Alcohol Portal project.

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. 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”

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”

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.