What is minimum unit pricing?

Minimum unit pricing (MUP) is a “floor price” beneath which alcohol cannot legally be sold and is based on the amount of alcohol in a product, measured in grammes.

A Standard Drink (established by the Department of Health | HSE ‘AskAboutAlcohol’) in Ireland contains 10 grammes of alcohol and an MUP would apply per standard drink.

It is a targeted measure, designed to stop strong alcohol being sold at very low prices in the off-trade, particularly supermarkets, where alcohol is frequently used as a “loss leader” and sold below cost.

The easy availability of such cheap alcohol has contributed to a dramatic shift in our alcohol purchasing and consumption habits from pubs towards the off-trade sector, which now accounts for nearly 70% of the alcohol sold in Ireland.

 

How does MUP work to reduce alcohol harm?

MUP is able to target cheaper alcohol relative to its strength because the price is determined by and directly proportionate to the amount of alcohol in the product purchased. This is important as these cheap, strong alcohol products are favoured by the heaviest drinkers among us, who generally seek to use as much alcohol as they can for as little money as possible and by young people, who generally have the least disposable income but have the highest prevalence of binge drinking.

These drinkers are also most at risk of alcohol-related illnesses, acute episodes and death.

MUP is particularly important to public health alcohol policy because those who are already drinking the lowest-priced, strongest products can only respond by changing the quantity they drink, which leads to greater responsiveness at the lower end of the price spectrum, which is largely occupied by heavy and young drinkers.

 

Will MUP be introduced in Ireland?

From January 4th, 2022, Section 11 of the Public Health (Alcohol) Act will be operational in Ireland.

 

Alcohol use is lower  – so where’s the problem?

Alcohol use in Ireland remains at very high levels (10.78 litres in 2019) and, while the recent pandemic and the closing or restrictive trading of licensed premises has brought a small reduction to 10.08 in 2020, the public health outcomes are poor. Drinking too much, too often, as binge drinking, is a major driver of alcohol harm, and common practice amongst Ireland’s drinkers.

This harmful drinking has a huge impact on our nation’s physical and mental health, causing the loss of 1094 lives due to alcohol annually or 3 deaths a day.

The main findings from the 2019–20 National Drug and Alcohol Survey (Health Research Board) regarding alcohol use include the following:

• 74.2% of respondents reported having consumed alcohol in the last 12 months (defined as current drinking), corresponding to 2,904,000 of the general population in Ireland aged 15 years and older.
• The median age at which 15–24-year-olds initiated alcohol consumption has increased from 16 years to 17 years since 2002–03.
• One-third (34.1%) of current drinkers typically consume at least 6 standard drinks per drinking occasion; this increases to one-half for male drinkers.
• Two-fifths (39.9%) of drinkers engaged in heavy episodic drinking (HED) at least once per month.
• The proportion of the adult population aged 15–64 years who have consumed alcohol in the last year has decreased since the 2002–03 survey, from 83.8% to 77.7% in 2019–20.
• The prevalence of alcohol use disorder (AUD) in the general population was found to be 14.8%, corresponding to one in every seven or 578,000 adults in Ireland.
• The highest prevalence of alcohol use disorder was observed among female drinkers aged 15-24 years while young males were most likely to have hazardous or harmful drinking patterns. Among male drinkers aged 15–24 years, 63.1% engaged in monthly HED.

Alcohol-related harm is most common among those with problematic drinking patterns. Those with Alcohol Use Disorder are thirteen times more likely than low-risk drinkers to experience any of the following harms – health issues, being involved in an accident or in a fight, experiencing role impairment, or negative impacts on their home life.

 

What will be the benefit of MUP for people who don’t drink to harmful levels?

The World Health Organisation (WHO) has pointed out that, beyond health consequences, the harmful use of alcohol brings significant social and economic losses to individuals and society at large. In Ireland, the burden of alcohol related harm is often experienced by those around the drinker, such as a family member, friend, co-worker or innocent bystander.

Alcohol’s harm to others undermines public safety and is experienced in every community, ranging from the nuisance factor to feeling unsafe in public places, and drink-driving to a violent attack by an intoxicated drinker. Although not often publicly visible, alcohol’s harm to others within the family can have very serious consequences for the safety and well-being of family members, with children being the most vulnerable. Life-long damage, through foetal development disorders, can also be caused to the unborn child by alcohol use during pregnancy.

Alcohol-related harm costs the State an estimated €3.7 billion annually, with €2.4 billion of that figure accounted for by health and crime-related costs alone, and road traffic collisions and work-related losses (e.g. absenteeism and loss of productivity) costing more than €850 million. Therefore, it’s clear that while drinking alcohol is an individual choice, it is one that has significant social and economic impacts, with substantial costs borne by the State and, ultimately, the taxpayer.

A reduction in harmful drinking through the introduction of MUP will benefit everyone in Irish society.

 

Why do we need MUP – isn’t Ireland already one of the most expensive countries in the EU for alcohol?

MUP is about tackling the very cheapest alcohol and reducing harm amongst the heaviest drinkers. We have relatively high excise duty on alcohol but it is also exceptional affordable, particularly, in the retail market which now dominates alcohol sales in Ireland.

Some of the off-trade alcohol, particularly in supermarkets, where alcohol is often sold as a ‘loss leader’ or below cost, is so cheap that a woman can reach her low risk weekly drinking limit for just €4.95, while a man can reach this weekly limit for €7.65 (AAI, price survey 2020).

Irrespective of income levels, low-risk drinkers are little affected by MUP, with the impacts of MUP increasing in line with the levels at which a person is drinking. As harmful drinkers purchase more alcohol at less than the proposed MUP thresholds compared with other groups, they would be affected most by this policy, leading to substantial health gains and a significant reduction in alcohol harm.

As well as having little impact on low-risk drinkers, MUP will also not affect the price of any alcohol sold in pubs, clubs and restaurants in Ireland, with alcohol in the on-trade already sold well above the threshold for any proposed MUP.

Notably, MUP has the support of the Vintners Federation of Ireland, the Licensed Vintners Association, and the National Off-Licence Association.

The measure was passed unanimously by the Oireachtas in October 2018.

 

Will MUP motivate cross-border alcohol shopping?

Not in a meaningful way, nor in the medium/long term. There are many factors contributing to the purchase of goods in Northern Ireland. Currency fluctuations, VAT differential and ‘cost of living’ remain the constant factors in such considerations.

Cross border trade is valued at €458 million (CSO:2018), while 14% of that household expenditure on shopping in Northern Ireland was on alcohol products: €64m.

Over 60% of the value of current cross-border shopping (Ireland to Northern Ireland) is conducted by those who live their everyday life in the Border region (CSO:2018).  The daily weaving of living between both jurisdiction is part of normal life; shopping in one or other area is determined by the immediate value of the currency and the available price.

MUP can save lives, reduce harm and release scarce public resources devoted to managing chronic alcohol related harm: alcohol related inpatient healthcare accounts for 11% (approx. €1.8 billion) of all public healthcare expenditure.

 

Duty Free Sales – UK | Northern Ireland

There is NO duty free sales between Ireland and Northern Ireland.

Because Great Britain is no longer in the European ‘Single Market’, duty free sales can be purchased by those who travel to GB. The Revenue limits for alcohol duty free from the UK are: 1 litre of spirits or 2 litres of other alcohol drink <22% ABV; 4 litres of wine, 16 litres of beer.

 

Sheffield Alcohol Policy Model and its assessment of the impact of MUP in Ireland

You can read the report relating to MUP in the Republic of Ireland here:

 

The University of Sheffield modelling estimates that with a €1 MUP per standard drink (assuming that it’s updated annually in line with inflation):

• Across the whole population, mean weekly consumption would reduce by 8.8%
• Across the whole population, 37.5% of alcohol purchased would be affected
• In both income groups (those in poverty and not in poverty), absolute reductions in consumption are estimated to be small for low risk drinkers and much larger for high risk drinkers
• Across the whole population, spending increases by 1.3% or €15.70 per drinker per year (€0.30 per week)
• Effects on health are estimated to be substantial, with alcohol-attributable deaths estimated to reduce by approximately 197 per year after 20 years, by which time the full effects of the policy will be seen
• Similar patterns are observed amongst reductions in alcohol-related hospital admissions, with an estimated 5,878 fewer admissions per year across the population
• Direct healthcare costs are estimated to reduce by €7.4m in year 1 and €254.7m cumulatively over the first 20 years of the policy
• Crime is estimated to fall by 1,493 offences per year overall and the costs of crime and policing are estimated to reduce by €7m in year one and by €102.7 cumulatively over 20 years
• Workplace absence is estimated to be reduced by 115,600 per year. This is estimated to lead to an annual saving of €16.1m in year one and €236.6m over 20 years
• The total societal value of these reductions in health, crime and work place harms is estimated at €1.7bn over the 20 year period modelled. This includes direct healthcare costs (€255m), crime costs (€103m), workplace costs (€237m) and a financial valuation of the quality adjusted life year (QALY) gain (€1.1bn)
• Overall revenue to the Exchequer from duty and VAT receipts is estimated to reduce by 2.1% or €34.3 million
• Revenue to retailers is estimated to increase by €68.5million (18.1%) in the off-trade and €9.3million (0.7%) in the on-trade. This is as reduced sales volumes are more than offset by the increased value of remaining sales.

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

Large multiple retailers can sell deeply discounted alcohol as a draw to attract customers – an increase in tax can easily be absorbed and off-set by increasing the prices of other goods. MUP sets a ’floor price’ for alcohol and cannot be undercut and therefore is a more targeted measure than increasing excise duty, which applies to all alcohol products and consumers equally.

Even if excise duty were increased, once the retailer pays the tax owed to the Government, retailers are under no obligation to pass this on to consumers so alcohol could still be sold as a ‘loss leader’. However, excise duty and MUP are not irreconcilable policies and can work together to reduce alcohol harm.

 

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

A ban on below-cost selling is likely to be far less effective than MUP and also much more difficult to enforce. There is no agreed definition of below-cost selling in Ireland or how it could be calculated. However, if below-cost selling is interpreted as alcohol being sold below VAT and excise duty, then a relatively small amount of alcohol is sold at this price in Ireland and a ban on below-cost selling in Ireland has been estimated to have almost no impact on population consumption.

The cheapest priced alcohol generally skims the top of combined VAT and excise duty. Defining cost as just excise duty and VAT, means ignoring the manufacturing, transportation and retail costs associated with the product. In other words, it is not a true reflection of the total costs. Working out a cost price of alcohol, that incorporates all of these contributing costs, would be a complex and expensive exercise, making a ban on below-cost selling of alcohol almost impossible to implement, monitor and enforce.

 

Times are tough – would MUP have a disproportionate impact on people on low incomes?

The principal targets of a policy instrument such as MUP, are high-risk, harmful drinkers and young drinkers, who suffer the gravest health outcomes from acute alcohol episodes.

These drinkers are more price sensitive than low-risk drinkers and select the cheapest, strongest alcohol products in the greatest volume, so to maximise the intoxication impact with the lowest intervention of any decision-making.

The ‘ordinary drinker’ who purchase normal branded alcohol products for informed low-risk drinking – 17 standard drinks for men, 11 for women – are unlikely to be impacted by the MUP.

Those drinkers in the lowest income bracket have:

• the highest adherence to low-risk alcohol use (95%),
• hold the highest cohort of non-drinkers (36%),  but
• suffer the greatest health inequalities.