The new year has brought with it a noticeable change to the shelves of our supermarkets and off-licences. On January 4th minimum unit pricing came into effect for alcohol products in Ireland, resulting in some noticeable increases in the price of alcohol for consumers.
Minimum unit pricing stipulates that the lowest price that can be charged for a gram of alcohol is 10 cents. A standard drink has 10 grams of alcohol in it. Therefore, the lowest permissible price for a standard drink (one standard unit of alcohol) is one euro. However, in reality, minimum unit pricing means that a can of beer will cost at least €1.70, an average bottle of wine will cost €7.40, and a bottle of vodka will cost a minimum of €20.70.
While many types of beers, spirits, and wines were already being sold for above the new minimum prices, many low-cost alcoholic beverages have had to up their prices in line with the new legislation.
Interestingly the minimum unit pricing comes in the form of a minimum price per gram of alcohol, as opposed to a tax on alcohol in order to raise the price. This means that the increase in price for consumers will be received by the alcohol industry and retailers, not the state itself.
This contrasts with the approach the government has taken with cigarettes and tobacco products. On a pack of 20 cigarettes costing €14, tax accounts for just under €11 of the price. This money goes to the exchequer where it can be used to help fund support for smokers and help offset the cost of dealing with smoking-related illnesses for the health service.
This is not the case with minimum unit pricing. The extra money being paid by consumers for alcohol will not go to the exchequer to be used for alcohol-related programmes and supports, but to the alcohol industry and retailers in Ireland. The state will benefit from increased VAT from alcohol sales, but the bulk of the increase in prices will go to the alcohol industry.
Ireland is the first member of the European Union to introduce minimum unit pricing. Minimum unit pricing aims to put an end to retailers using alcohol as loss leaders, i.e., selling cheap alcohol in order to attract customers into their stores. However, these same retailers will benefit from the increase in price. In Scotland, where minimum unit pricing is already in place, MUP is estimated to represent a windfall of just under €150 million for the alcohol industry. It is worth noting that minimum unit pricing has resulted in a decrease in alcohol consumption in Scotland since its introduction.
Minimum unit pricing is now in effect, and we must now pay more for many types of alcohol in our supermarkets and off-licences. While there is evidence to show that minimum unit pricing reduces alcohol consumption, it is noteworthy that the additional cost being paid by consumers is going to the alcohol industry and retailers themselves.
One must wonder if the government has missed an opportunity to use minimum unit pricing to help support programmes to tackle problem alcohol consumption and to fund greater support for individuals with alcohol problems. Perhaps the introduction of minimum unit pricing would be more palatable to the general public if the increased costs for consumers went directly to funding programmes and supports for the very people the legislation is intended to help.
Mark O’Rourke – Business Correspondent