“Brewer Molson Coors and drinks giant Diageo have predicted a growth in illicit cross-border trading if minimum pricing goes ahead in Scotland.” Wow, they must have some powerful crystal balls there.
But more interesting is the later comment in the article:
On the issue of competition, the Office of Fair Trading claimed there may be an unintended consequence of such a scheme — in particular, that retailers will increase their margin on selling alcohol, which “could give retailers an increased incentive to sell more rather than less low-cost alcohol — for example, through advertising or changing the mix of products on the shelves”.Of course the product mix will change, as there will no longer be any point in selling low-priced economy brands that come in well below the minimum price. Why buy a bottle of High Commissioner when you can get a bottle of Grouse for the same price? So, while undoubtedly minimum pricing would strengthen both retailers’ and producers’ margins, it wouldn’t be the bonanza for business some claim, as the bottom end of the market would simply disappear.
Surveys indicate that a 45p/unit minimum alcohol price would affect over 70% of alcohol units sold in the off-trade, so for most of the market price competition would be a thing of the past. So inevitably there would be much more reliance on ways of encouraging trade that do not depend on price, such as in-store promotions and advertising, which would be funded by the fatter margins.
More alcohol advertising would be a likely unintended consequence of minimum pricing. So no doubt this would provide ammunition for the next step in the programme – to severly restrict advertising, with a view to eventually banning it entirely.