Monday, 3 December 2018

Who’d ha’ thought it?

Minimum alcohol pricing has now been in effect in Scotland for six months. I wrote about this at the time. Given that nothing of this kind has ever been tried before, obviously it was hard to predict the results, but it was a reasonable assumption that overall off-trade alcohol sales would show a small decline, but the value of those sales increase.

However, it hasn’t turned out quite that way. According to a study commissioned by cider maker Aston Manor, the total volume of alcohol sales has actually increased by 4%, while the value has gone up by no less than 11%. That certainly isn’t what was meant to happen.

Obviously it’s early days yet, and this is only a survey, not a detailed analysis of actual sales. It follows a general pattern, with sales south of the border in fact rising by 7%, encouraged by the long hot summer and England’s good run in the World Cup. We will have to wait and see what the official figures show, and how cross-border sales are affecting alcohol consumption in Scotland, but it does call into question how effective a policy this is likely to be.

Not surprisingly, sales of the notorious Buckfast tonic wine have shown a marked increase. Contrary to widespread belief, this has never been particularly cheap in terms of price per alcohol unit, and its appeal is down to its high caffeine content. It no longer commands such a price premium over other drinks. In contrast, sales of white ciders have plummeted, as they had little to recommend them apart from the high “bangs-per-buck” ratio. Frankly, it’s surprising anyone is continuing to buy them when they can get far more palatable drinks at the same price.

Convenience stores have gained market share over supermarkets, as the big stores no longer enjoy the price advantage they once did. In fact, the whole thing can be regarded as a price-fixing sceheme in favour of retailers. It’s rather ironic that the useful idiots of the Scottish Licensed Trade Association were so keen to support it, when it has given such a shot in the arm to the financial health of the off-trade. Given that household incomes haven’t increased by 11% or anything like it, some other area of expenditure must have suffered, and it could well be that pubs are included within that.

What seems to be happening is that, given that all categories of drink at the lower end of market now have a level playing field in terms of price, consumers are being more discerning over their preferred method of getting their desired alcohol kick. It’s the most enjoyable way, not simply the cheapest. This helps explain the rise in sales of fortified wines. There’s no longer any place in the market for the £3.49 bottle of gutrot wine or the £9.99 bottle of paintstripper vodka.

It will take a lot longer before we really have a full picture of the impact, especially in terms of the effect it has on “problem drinkers”, who are supposedly the group being targeted. But it doesn’t take a great deal of insight to realise that, if it isn’t felt to be “working”, however that is defined, the inevitable reaction will be to increase the dose and jack up the minimum price yet further.

13 comments:

  1. <>

    No. It was easy to predict the results. The Sheffield Alcohol Policy Model produced precise predictions more or less at the push of a button (or refreshing the spreadsheet). Mind you, they were wrong...

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  2. If there is a minimum price rise, expect Scots at Carlisle.

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    1. They're already at Carlisle, and Berwick.

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    2. I've not seen any reporting on the level of cross-border shopping. When I was up there in August, I did take a look in Carlisle ASDA - which is handily situated right next to Junction 44 of the M6 - but didn't see any evidence of offers specifically catering for Scottish tastes. Mind you, it was Monday afternoon.

      It doesn't need to be organised white van men. Every time a Scot crosses the border, it will make sense to pick up a litre bottle of whisky or a slab of lager for their family or friends.

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    3. That will happen to some extent but not a great deal. The Borders are very sparsely populated. The vast majority of Scots live in the central belt which is 90 minutes or more from Carlisle. No doubt some people who live a few minutes drive from the border will pop south to pick up some booze, but I very much doubt many will undertake a 3 hour drive to pick up some White Lightning.

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    4. I was in the big Morrisons at Berwick last week - less than two miles from the border - so it's a regular destination for many Scottish shoppers already, but prices for their cheap spirits are two quid less than minimum pricing dictates, and you can get 20 440ml cans of Stella for £16 which is a few quid cheaper than it would be in a Scottish retailer. I'm also pretty sure the drinks area in this store is much bigger than it was, with pallets of slabs of cheap lout on display which you don't see at similar supermarkets even on Tyneside any more.

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  3. The Stafford Mudgie ?4 December 2018 at 11:25

    But can "a price-fixing sceheme in favour of retailers" mean "that all categories of drink at the lower end of market now have a level playing field in terms of price"?

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    1. I don't think the two are in conflict with each other. At the lower end of the market, there is no longer any scope for price competition. Retailers enjoy fatter margins because everything sells for the same in terms of alcohol units.

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    2. It would be interesting to know if the retailers are keeping that margin. I would suspect not. If sales of Frosty Jacks plummet the manufacturers will be raising their prices dramatically to claw back as much of the additional margin as possible.

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    3. They can't charge different prices to retailers in Scotland and England, though. There has been some discussion, which I admit I haven't followed, about whether the minimum price applies to wholesale customers. There has always been an issue with "seepage" from cash and carry warehouses into retail sales, and that is likely to become more pronounced now. Also no more staff discount on booze for retail employees!

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    4. Minimum pricing doesn't apply to wholesalers. If it did the current minimum retail prices would be far higher, double in many cases given some margins on packaged beers and cider. Cash and carry warehouses like Bookers stock alcoholic products specifically for licenced retailers so I'm not sure how that could be seepage or an issue. Costco never sold alcohol even close to minimum pricing so it hasn't affected them.

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  4. The Stafford Mudgie4 December 2018 at 13:19

    I think I understand but wasn't the playing field leveller when quality, or lack of it, was more directly related to price and white ciders sold well before their high “bangs-per-buck” ratio was denied them ?

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  5. Minimum pricing isn't working. The price needs to rise.
    It needs to be twice what CAMRA members pay for a craft beer in order to be effective.

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