by Antony Begley, Kevin Scott with support from Mark Baird
Minimum pricing of alcohol has its backers and detractors, and in the latest twist in its eventful pre-history, it is now subject to a legal challenge, but while the drama continues just how much will MUP affect prices in your store?
It’s been a ‘will they, wont they?’ relationship normally confined to the plots of TV shows, but it seems that the Scottish Government and Minimum Unit Pricing have finally found matrimony and, barring a legal victory for the Scotch Whisky Association, the legislation will soon be introduced and the prices of many alcoholic beverages will increase accordingly.
The question is, just how many of the drinks you sell will increase, and by how much? This is a policy, remember, the Scottish Government said is aimed at targeting heavy drinkers, that the average responsible drinker will not be affected by the pricing. Turns out that’s not quite the case, though you need to delve beyond Government headlines to find this out.
A Scottish Government report issued by NHS Scotland on alcohol pricing published in August 2011 and titled Monitoring and Evaluating Scotland’s Alcohol Strategy says that just under three-quarters of all off-sales alcohol in Scotland is sold below the 50p per unit mark. The report says: “Over the three years 2008-2010, the proportion of off-trade alcohol sold in the lower price bands diminished, with the biggest decline in the cheapest price bands. In 2008, 57% of off-trade alcohol was sold at less than 40ppu, 81% at less than 50ppu and 91% at less than 60ppu. By 2010 this had declined to 45% of off-trade alcohol sold at less than 40ppu, 73% at less than 50ppu and 87% at less than 60ppu.”
The important numbers
That’s a lot of numbers. The important one is that by 2010, 73% of alcohol sold in the off-trade was at less than 50ppu. Does that sound like a policy that will only affect heavy drinkers? The plot thickens however, if we look at the Scottish Government’s Business & Regulatory Impact Assessment. The results of this study you can read in full in the sidebar opposite, but the bones of the report show that 92% of vodka, 72% of whisky, 77% of beer and 63% of wine prices in the off-trade will rise overnight upon the implementation of a 50p minimum unit price.
What needs to be remember here of course is that these figures take in every single sale and not single SKUs, so if you sell 10 bottles of own-label vodka at £9.99 a bottle, that accounts for 10 sales, not one. Regardless, with over 90% of vodka sold and over 70% of beer sold affected by the 50p price, it is fair to say that the ‘average drinker’ is going to be affected.
From the drinks to the retailers
Price varies across retailer as much as it does product, so this makes up another important element of the debate. A high-end specialist off-licence that purveys Cristal Champagne and 50 year-old single malt just isn’t going to be recalibrating its pricing gun on the morning Minimum Pricing comes into force, but every other shop will. German discounter Aldi, for example, sold 92.3% of its alcohol at less than 50ppu in 2010. Asda’s figure is 80.1%, Tesco 72%, Sainsbury’s 63.9%. Even you, as one of Scotland’s local retailers sold the vast majority of your alcohol at less than 50ppu: 66.1% to be precise.
Look at your alcohol shelves – look at your sales; does that number surprise you? If you thought you weren’t going to be hugely affected by the impact of minimum pricing, think again.
Looking closer at the figures though, it seems local retailers are already among the most responsible of retail outlets – begging the question of why they are targeted as being sellers of cheap alcohol.
According to a report by the Institute of Fiscal Studies, back in 2005, 68.7% of Tesco’s alcohol was below 45ppu (the figure used in the story – remember Scotland’s MUP is actually 50ppu), this had risen 4.8% by 2010, while in the independent channel, this actually decreased by 0.3%. This figure has nothing to do with whether sales have gone up or down in total, but shows that pricing has been increasing in small stores while it’s getting cheaper in supermarkets. Nevertheless, it looks as though by spring 2013 it’s going to be getting a lot more expensive everywhere – so be sure you’re prepared.
2005-2010 percentage change of alcohol sales at 45ppu
- Asda: +8.3%
- Morrisons: -1.3%
- Sainsburys: -0.3%
- Tesco: +3.8%
- Local stores: -0.3%
Minimum Pricing will only affect heavy drinkers? Really?
- 66.1% of alcohol sold in c-stores is priced at less than 45ppu
- 92% of vodka is sold below 50p per unit
- 85% of cider is sold below 50p per unit
- 77% of beer is sold below 50p per unit
- 72% of whisky is sold below 50p per unit
- 63% of wine is sold below 50p per unit
