Minimum pricing unlikely to deliver on promises - and will mean unwanted consequences

27/04/2018

MUP Scotland

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Minimum Unit Pricing (MUP) for alcohol will come into force in Scotland from midnight 1st May, 2018.

It is a bold move by the Scottish Government as it represents the first national implementation anywhere in the world of a minimum price per unit of alcohol, especially as it is based on an untested and theoretical model.

Aston Manor Cider, as a responsible producer of alcohol, has taken a close interest in the development of MUP, the arguments and evidence presented to support it, and the implications for consumers, retailers and producers.

Gordon Johncox, chief executive of Aston Manor writes:

“Effective and proportionate action to tackle alcohol misuse will always be welcomed by this business.

“That we have considerable reservations both in terms of the underlying premise for MUP and the disproportionate impact it will have, should never be misconstrued as opposition to effective action on misuse.

“It is in the interests of all, including drinks producers, that everyone has an informed and sensible relationship with alcohol whether they choose to drink or not. It is a strand of our ambition to be a sustainable and responsible business in the same way as is the investment we make in orchards.

“So whilst the introduction of MUP will affect the mix and volume of our sales, our interest in the debate around this policy and other initiatives is because we take seriously our intention to be a sustainable and responsible business.

“Further, we have considerable knowledge and insight into the composition and dynamics of the drinks market and of the nature and preference of consumers that is, regrettably, not matched by policymakers and others involved in the public debate on alcohol.

“On this point, our view of the flaws of MUP, informed by independent evidence and actual market data are:

  1. The view of frontline drug and alcohol professionals is that dependent (or harmful) drinkers are either not price sensitive or will simply displace misuse to another substance, i.e. when a substance misused becomes more expensive or supply is restricted, then 56% of professionals believe that misuse switches to another substance, a further 37% believe that misuse is sustained with a greater proportion of finite resources committed (potentially making matters worse). Yet MUP represents a whole population measure to address the circumstance of around 5% of the population that frontline professionals suggest will be unresponsive in any event.
  2. The forecast model for MUP significantly underestimates how much moderate drinkers will be out of pocket based on real-world experience and actual market data. If the level and pattern of drinking were to remain unchanged after 1st May, then it would cost drinkers in Scotland in the order of £150m a year. This figure is well in excess of the predictions and claims made – and it is important to recognise that this is not increased revenue to Government to support the minority that drink at hazardous and harmful levels. According to the forecasts made for MUP it will deliver a reduction in Government revenues, hence the cost to Scottish consumers will be additional revenue for (off-trade) retailers. The analysis of actual sales data reveals that many of the products most affected by the ‘inflation’ created by MUP will be value and mainstream beers and ciders – products between 4 and 5% abv, with many set to double in price. These products are enjoyed by low income households, i.e. people that typically consume less than more affluent drinkers.
  3. Counter to the view that is often repeated and promoted, MUP will reduce spending in pubs and bars. Representing as it does a regressive cost on even moderate drinkers, the increased cost on such a wide range of drinks will reduce the spending of consumers in pubs. This is clear in the forecast model, yet is not referenced or highlighted (even by the researchers that formulated the forecast model).
  4. The widely held view is that MUP will tackle so-called ‘problem drinks’ like white cider. Actually frontline drug and alcohol professionals reject the notion of ‘problem drinks’ rather they reference a small minority of people that have issues around the misuse of alcohol and other substances. For reference the white cider category is very small, representing around 0.27% of total alcohol and is in long-term decline.
  5. All consumers have a repertoire of drinks. The independent evidence covering the status and preferences of white cider consumers points to them ranking spirits, wine, and beer ahead of (white) cider. So when MUP disproportionately impacts cider, as it will, then these consumers (typically moderate drinkers on low incomes) will switch to higher strength drinks. Many of these drinks will be imported and have a poorer carbon footprint than cider produced in the UK. Again the forecast model for MUP is clear about this – it points to a 7.4% increase in wine sales given a 10% increase in the price of cider. Though this is not a feature of MUP that receives attention. We actually believe the impact could be much more marked than this.
  6. There is then a host of logistical issues around the implementation of MUP that are likely to introduce further distortion to the market, giving rise to problems. These include online sales, promotions with other products, and people travelling to England to buy alcohol. One feature of MUP already evident is the reduction in consumer choice as products are removed. This will increase as the artificial (minimum) price means a narrower price differential between value, mainstream, and premium products – the consequence of which is that ranges are reduced and consumer choice is depleted.

“We believe any sensible and independent analysis of the case for MUP, with the limited impact on harmful drinkers and the disproportionate burden on moderate drinkers, makes this an unmerited policy.

“This is exacerbated by the fact that MUP means reduced Government revenues at a time when the resources going into drug and alcohol services have been cut over several years.

“It is a matter of regret that the poorly informed public debate to this point has not enabled a closer examination of MUP. As reality sets in over the coming weeks and months it is likely that many will be prompted to reconsider their view.”

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