jamie goode's wine blog: Alcohol regulation: is minimum unit pricing the answer?

Sunday, September 27, 2009

Alcohol regulation: is minimum unit pricing the answer?

Looks like Scotland may soon get further alcohol regulation in the form of a minimum price per unit. According to this BBC news report, a minimum price of 40 p per unit would save many lives. This would make the lowest price for a bottle of wine 3.60.

The alcohol industry has campaigned against this sort of intervention, but the current government sentiment is one where they are almost bound to take some sort of step to lessen the social harm of cheap alcohol.

I was discussing this issue with Chris Losh on the way back from Noval. He's an experienced trade and consumer journalist who has written quite a bit on these issues. Chris reckons that the industry has basically ceded ground to neo-prohibitionists simply because it hasn't come up with any strategies of its own. It has simply opposed every form of regulation that has been proposed.

I agree with Chris that the best form of regulation would be for the drinks trade to campaign for a ban on alcohol price promotion. While this is undoubtedly more complex than it seems initially (Where does it leave bin-end sales? What can show owners do with slow moving stock?), I think it would be the least problematic of all strategies.

It would make it much harder for supermarkets to use drinks as a loss leader. It would create a level playing field [surely there has to be a less tired metaphor than this?] for wine sales. It would do away with these depressing soft brands that are priced artificially high only to be discounted deeply.

And it would force Laithwaites to change their business model, too.

The question is, in the long-run, would the consumer suffer? Do consumers really benefit from price promotions as they are now?

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At 3:46 PM, Blogger JPM said...

Forgive my ignorance, but why would this force Laithwaites to change their business model?


At 4:36 PM, Anonymous Anonymous said...

They have, man you are out of the loop.

At 4:44 PM, Blogger Peter F May for The Pinotage Club said...

The real answer is to provide our youth with meaningful careers and thus responsibilities ....

At 4:52 PM, Anonymous Alex Lake said...

Would this be a Europe-wide measure? I doubt it VERY much. Thus it's going to result in even more sales going to booze-cruisers - and open the Government to criticism from those not in the South East.

Solving the real problem is far too difficult, and so treating the symptoms in a fairly mindless way is inevitable while we have a government so in thrall to the "something must be done" mentality.

At 7:04 PM, Blogger Jamie said...

JPM - the Laithwaites business model has been to create own brands, price them perhaps more highly than the wine justifies, and then offer deep discounts to their mail order customers who feel like they are getting bargains

Peter, I think that the heavy use of drugs, legal and illegal, reflects a malaise at the heart of society, and it is better to address this than to try to limit the supply of self-medication.

Alex, agree.

At 7:50 PM, Blogger Nick Oakley said...

As a seller to the major supermarkets, this initiative appears, at first glance to be quite attractive, especially with ex cellar prices under so much pressure. But look deeper and the whole issue is fraught with difficulties. In almost every corner of the wine trade discounting occurs. Traditional merchants offer case discounts; then there are multibuys, bin end clearance, special entry price offers (the Laithwaites reference)and many more. And what about wholesalers who traditionally offer different prices for different volume purchases? It would be impossible to sort out.
And don't forget, those supermarkets that come in for all the flak for using wine as a footfall driver, remember that they are, in many cases, introducing people to this great product called wine. Not everyone stays at the bottom rung of the ladder in their purcahsing patterns and we all benefit in the long run as they trade up.

At 8:28 AM, Anonymous Anonymous said...

Any ideas on how to address that "malaise", Jamie? :-)


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