Supermakets should be forced to supply their alcohol pricing data to the Government to prove they are not using it as a loss-leader, alcohol research groups say.
A study published in the New Zealand Medical Journal yesterday showed it was possible to buy a standard drink for as little as 62 cents – less than a glass of bottled water and almost as little as a glass of milk.
The research has drawn renewed calls for the Government to reconsider raising excise on alcohol, with critics pointing to the buying power of supermarkets to explain why alcohol has become increasingly affordable since 1999.
Professor Jennie Connor, head of Otago University’s preventive and social medicine department, said there had been quite a lot of discussion among alcohol researchers about loss-leading – the practice of selling a product below cost to attract customers, while making up the profit on other products.
“The supermarkets absolutely deny it … but it certainly appears that they’re cutting their margins very, very sharply on alcohol and making it up elsewhere.”
The turnover of alcohol in supermarkets was eye-watering, she said. “Supermarkets are driving a lot of what’s going on because they’ve got such massive buying power.
“My fear is that people are paying more for real food because they’re selling cheap alcohol.”
The Government had asked alcohol producers and retailers to supply pricing data so it could be analysed, but Dr Connor doubted they would comply voluntarily. “If the Government wants the data then they need to make it mandatory.”
Drug Foundation director Ross Bell agreed, saying it was particularly important to scrutinise supermarkets.
“I’ll take them at their word that they’re not loss-leading, but there’s a difference between loss-leading and the practice of heavily discounting – they are absolutely discounting their booze.”
He had heard anecdotal evidence of bars purchasing their wine from supermarkets, because it was cheaper to do so than buy it directly from the producer.
“You can get some quite significant discounts – $15 off a bottle of wine, for example.”
A spokeswoman for Progressive Enterprises, which owns the Woolworths and Countdown brands, said the company’s supermarkets did not sell liquor below cost “at any time”.
She would not respond to any of The Dominion Post’s other questions.
Foodstuffs – which owns the Pak ‘n Save and New World brands – did not return calls.
Lion Nathan spokesman Neil Hinton said it was up to retailers to set retail prices. “We don’t tell our customers how to run their own businesses.” He criticised the Otago University study, saying the comparison with bottled water and milk was “mischievous”.
The reason alcohol was more affordable was that New Zealand was getting wealthier, he said.
Justice Minister Simon Power said the reason the Government had requested, rather than required, producers and retailers to supply data was because it was “not easily compiled”. Preliminary discussions had found both willing to help the Government.
Source: Stuff.co.nz (New Zealand), 16/10/10
