Something must be done

As I mentioned in my post about the pub garden smoking ban, the government are now also threatening the drinks industry with Minimum Unit Pricing (MUP). The headline is misleading, as the pub sector would, for now, be largely immune from this, but the intention is very clear. I have written about this at length over the years, mainly in the content of Scotland, where it was introduced in 2018. The conclusion, as set out in the Scottish government’s own report, was that it had done little or nothing to reduce problem drinking and had, as many of us had predicted, led to undesirable side-effects. The main underlying motivation for the policy seems to punish and denormalise ordinary, moderate drinkers by increasing the price of a modest, everyday pleasure. It has the same logic as increasing the price of petrol as a strategy to improve road safety.

It is disappointing that many in the pub trade seem to believe that MUP would be a desirable policy. However, under any scenario it would still leave off-trade drinks much cheaper than those in the on-trade, so the idea that it might prompt a switch in drinking habits does not stand up to analysis. Indeed it could be argued that it might harm pubs by squeezing household budgets and leaving them with less disposable income.

Their motivation seems to be more a case of wanting to spite the off-trade who they perceive as rivals. However, most people divide their drinking allegiance between the two depending on circumstances, so it isn’t a binary choice between one or the other. In reality, the enemy of both is the public health lobby. It’s rather like the communists and anarchists being at each other’s throats during the Spanish Civil War, which only served to benefit Franco.

Something that tends not to be appreciated is that MUP is actually a policy that plays into the hands of the off-trade, as it in effect allows them to operate a government-sanctioned price fixing ring, something that most businesses yearn for, but is generally outlawed by competition law. The price elasticity of alcoholic drinks is well below 1, so, while they may lose some sales, they will more than make up for it through fatter margins on the drinks they do sell. It will give them more incentive to promote the sale of alcoholic drinks, as they will generate more profit per square foot, and it may also give them the opportunity to raise the prices of premium products to maintain a differential. Because of this, the drinks industry in general tends to be fairly relaxed about it. The people it really does hurt are drinkers of modest means.

The government have demanded that the industry do more to “tackle the harms of drinking”. However, as long as alcohol is sold legally, some people are going to abuse it. The only way they can completely eliminate any responsibility is to stop producing and selling alcohol entirely. In recent years, the industry has promoted a number of initiatives aimed at reducing the harms of alcohol, including setting up the Portman Group to monitor irresponsible advertising, and DrinkAware to advise on health risks. It has also reduced the strength of a vast array of beers and ciders.

But, however, far you go, it will never be enough for Public Health, and they will always want to go further. Appeasement only results in further demands. Surely all that should be expected of alcohol producers is that they should meet all the legal requirements placed on them. If government wants them to do more, that must be clearly set out.

The relationship between government and drinks producers is also likely to change over time. Health groups have demanded that the government ban MPs from receiving gifts from firms involved in “tobacco, alcohol and junk food”. Notice who they’re lumped in with? In future, alcohol producers will be increasing regarded not as valued contributors to a successful economy, but as pariahs involved in a “toxic trade”, who simply have to do as they are told and have no right to be consulted or involved in decision-making. There is no point in alcohol producers arguing that they are different from tobacco manufacturers, when Public Health regard them as two sides of the same coin. And yes, craft brewers, that means you too. Much of that will also be applied to retailers of alcohol such as pubs, not just to producers.

I made the point back in 2020 that, despite a lot of negative publicity, the drinks industry has in fact over the past fourteen escaped relatively lightly from the tide of lifestyle regulation. The duty escalator was abandoned, duty has been frozen in some years, and never increased above the rate of inflation, and there have been no significant restrictions on advertising and promotion.

But that is likely to change in the coming years so, over and above the pub garden smoking ban, expect to see MUP, above-inflation duty rises, severe curbs on advertising and sponsorship, display restrictions in shops, further attempts to reduce beer and cider strengths, and maybe even plain packaging. Buckle up, folks, it’s going to be a bumpy ride!