The rise in alcohol-related harms and costs is linked to the increased availability, affordability and marketing of alcohol. Price is a key driver in the consumption of alcohol.  We set out the case for minimum pricing, spell out the facts and dispels the myths and misinformation.

What is minimum pricing?

Minimum pricing is the lowest price at which an alcohol product can be sold, the cost of a product based on the number of units it contains. To put it simply, the more units of alcohol in a bottle, the higher the price.  As such, minimum pricing affects people directly in relation to how much they drink. This means that minimum pricing will primarily affect heavy drinkers (i.e., those that drink most), as well as children and young people who are more likely to consume low-cost alcohol.

Minimum pricing has little impact on those who drink within low risk weekly limits, i.e., moderate drinkers, as, by definition, they drink less and they tend not to buy the cheapest products.

Why do we need minimum pricing now?

Reducing current levels of alcohol-related harms and costs is good news for the taxpayer. The estimated cost of alcohol was €3.7 billion in 2007, that’s an average alcohol-related tax burden of €3,318 on each person paying income tax in Ireland. Alcohol-related harms cost the healthcare system €1.2bn, while alcohol-related crime costs €1.2bn.

The massive drop in the relative price of alcohol alongside the liberalisation of licensing laws which led to an increase in outlets selling alcohol has fuelled a growing health crisis. The real price of a drink in Ireland has decreased dramatically due in a large part to the rise in incomes, making alcohol 50% more affordable than it was in 1996. (RAND Report)

Alcohol has also become more available and is sold in more outlets than ever before. Increased availability has increased competition between alcohol retailers, mostly in the off-licence sector. Cut price alcohol is often used as a loss leader, to attract customers into supermarkets and shops.

At current prices, it’s possible for a women to reach her weekly limit for low risk drinking for just €6.30 a week while a man can reach this limit with a spend of less than €10. The rise in the availability of alcohol alongside a drop in price has led to vast increases in alcohol-related harms and costs.

Cheap Alcohol: The Real Costs

• More than half of Irish adults report a harmful drinking pattern - that’s 7 in 10 men and 4 in 10 women who drink (SLÁN 2007 Report on Alcohol, Department of Health and Children)
• Between 1995 and 2004
  o alcohol-related hospital discharges increased by 92%
  o alcohol-related mortality almost doubled
  o the discharge diagnosis of alcoholic liver disease increased by 147%
• Between 1995 and 2003, there was an 85% increase in the number of hospital discharges with alcohol-related intentional injuries
• Between 1996 and 2002, public order adult offences increased by 247%
• Alcohol has been identified as a contributory factor in 97% of public order offenses as recorded under the PULSE system (Hope 2008)
• Between 1996 and 2005 juvenile offences of intoxication in a public place increased 12 fold

The cost of alcohol to the Irish economy outweighs the benefits. If we are to reduce the costs of our alcohol use, we need to reduce the levels of alcohol consumed - this can be best achieved by increasing price and reducing availability.

Alcohol is not an ordinary grocery commodity and should not be treated as one.

But isn’t Ireland one of the most expensive countries in the EU for alcohol?

This is probably one of the greatest myths about alcohol in Ireland.

The RAND Report commissioned by the DG SANCO (European Commission’s Department of Health) for the European Alcohol and Health Forum found that Ireland was one six countries in the EU where alcohol has become over 50% more affordable than it was in 1996.

Furthermore, alcohol prices in Ireland are falling while average prices are rising. According to CSO figures, alcohol prices fell by 1% in Ireland between September 2010 and September 2011, while average prices rose by 2.6%.

How will increasing the price of the cheapest drink make any difference to how much people drink?

The price of alcohol is directly linked to how much people drink. When price increases, consumption levels fall. Increased alcohol prices reduce consumption leading to decreases in alcohol-related harms and costs.

The World Health Organisation’s (2009) review of 32 alcohol policy measures found that in terms of the degree of effectiveness, the breadth of research support and the extent to which they have been tested cross-culturally and the relative expense of implementation found the alcohol policies most effective in reducing alcohol related harms and costs are policies which put controls on price and availability, drink driving laws and brief interventions.

Minimum pricing policy increases the price of the cheapest drink, which is the drink that tends to be purchased by heavy drinkers as well as young drinkers. As such, this pricing policy has little impact on those who drink within low-risk weekly limits. Those weekly limits are 14 units for a woman and 21 for a man.

What is the link between the amount we drink and the damage from drink?

There is a direct relationship between the level of alcohol consumed in a country and the levels of alcohol-related harms and costs. Increased alcohol prices reduce consumption which will lead to an attendant decrease in alcohol-related harms and costs.

Why doesn’t the Government just increase tax on alcohol?

Large multiple retailers often sell deeply discounted alcohol as a draw to attract customers - an increase in tax can easily be absorbed. Minimum pricing sets a floor price and cannot be undercut by loss-leading and below-cost selling.

Would banning below cost selling of alcohol not have the same effect?

There is no agreed definition of below cost selling in Ireland, nor is there an agreed formula for calculating cost price. Also, cost prices can change over time. Working out the cost price of alcohol would be a complex and costly exercise, making a ban on below cost selling of alcohol almost impossible to implement, monitor and enforce.

By contrast, the operationalisation of minimum pricing would be simple, as the cost of a drink can be calculated using the simple formula minimum price per unit X number of units in drink = price. As such, fewer resources would be needed to administer, implement, monitor and enforce a minimum pricing policy.

Some of the commentators calling for a ban on below cost selling are, in fact, calling for a ban on selling alcohol below the total taxation on a drink. i.e., below VAT plus excise. This is not the same as below cost selling as cost price (which can include costs such as manufacture, packaging, transport, etc.) has not been included in the price of the drink.

Will minimum pricing have a disproportionate impact on people on low incomes?

The simple answer is that this will depend on how much alcohol someone buys. Minimum pricing, by definition, impacts most on those that drink the most. As we already know, a man can reach his low-risk weekly limit for less than €10 and a woman for €6.30 - around an hour’s work on minimum wage.

It is important to remember that alcohol is not an ordinary grocery like bread or milk, it is a luxury good. It is also important to remember that people on low incomes suffer a range of health inequalities, ie; nutrition, education, access to healthcare contingent on ability to pay that alcohol-related harms can further exacerbate.

At what level should a minimum price be set?

A minimum price needs to be set at a level the evidence indicates will reduce the burden of harm from alcohol use. To do this will require an analysis of the market, alcohol consumption and expenditure patterns, among other data sets such as health and crime data. It is unlikely to be appropriate to specify what a minimum price per unit should be in primary legislation. To maintain effectiveness, a minimum price will need be reviewed on a regular basis and adjusted when necessary to maintain its value in line with inflation.

Who wins? Who benefits from minimum pricing?

The benefits of minimum pricing resultsing in a reduction in consumption and assocaited alcohol-related hamrs are numerous.

The positive benefits of minimum pricing are numerous, many of which will be seen immediately on implementation

• Decreases in workplace absences and in violent crimes
• Reductions in crime and public order offences involving children and young people and in the cost of responding to same
• Reduction in social and health harms and costs for the drinker and those around them
• Large retailers cannot simply absorb price increases as can happen with other pricing policies

The benefits reach a diverse range of stakeholders:

• Moderate drinkers, i.e., those who drink within low risk limits, are least affected
• Heavy drinkers, along with children and young people, are particularly affected
• Small retailers and off-licences put on a level playing field with large multiple retailers
• It is likely that the decline in the volume of alcohol sales will be more than offset by the unit price increase resulting in an overall increase in profit for retailers
• Large retailers can raise alcohol prices to the minimum price without running the risk of losing customers to competitors

(Based on University of Sheffield research on minimum pricing commissioned by the Scottish government)

For more information, See Alcohol in Ireland: Finding the Right Measure: Pre Budget Submission 2012 and the case for minimum pricing

Alcohol is one of the most heavily marketed products on our shelves with a total market value of €6 billion in Ireland

• Read More at: Leading experts in alcohol marketing explain how the alcohol industry sells its products