Alcohol Pricing and promotion

To assist policy making, and as foreshadowed in the National Alcohol Harm Reduction Strategy, the Government tendered for a research report on the effects of alcohol pricing and promotion. In the event, the contract was awarded to a research team at Sheffield University, and the report was published in two parts.

The first part provided a systematic review of the international evidence on the link between the price and promotion of alcohol on the one hand and patterns of consumption and alcoholrelated harm on the other, as well as the effectiveness of related policy interventions. In particular, the review indicated how the promotion and pricing of alcohol affects total alcohol intake, and patterns of consumption in groups identifi ed as priorities by government, namely underage drinkers, young adult binge drinkers, heavy drinkers, and those on low incomes. The second part modeled the potential implications of changes to current policies on alcohol taxation and promotion, especially the impact on health, crime, and employment.

The researchers found that the exact size of the impact of price measures varied between countries and a major limitation of the evidence base is that most studies examining the impact of such policies have been conducted in the United States. Nevertheless, they say there is very strong evidence for the effectiveness of alcohol taxes in targeting young people, heavy drinkers and the harmful effects of alcohol.

Dr Petra Meier “This is the first study to integrate data on alcohol pricing and purchasing patterns, consumption and harm, to answer the question of what would happen if government were to introduce different alcohol pricing policies. The results suggest that policies which increase the price of alcohol can bring significant health and social benefits andlead to considerable financial savings in the NHS, criminal justice system and in the workplace. “

The second part of the University of Sheffield report amplifies the finding that alcohol pricing policies are effective in reducing alcoholrelated health, crime and social costs, and it analyses over 40 separate policy scenarios, including setting minimum prices per unit of alcohol at different levels and bans on price-based promotions in off licenses and supermarkets.

The results of the research show that targeting price increases at cheaper types of alcohol would affect harmful and hazardous drinkers far more than moderate drinkers. Heavier drinkers, by def nition, buy more alcohol, but detailed analysis of data on purchasing patterns also shows that they tend to buy more of the cheaper beers, wines and spirits. The effects of price increases may incidentally be advantageous for alcohol retailers (both in off-trade and on-trade) because the estimated decrease in sales volume is more than offset by the unit price increase, leading to overall increases in revenue.

The detailed findings of the research are:

Across the board price increases can have a substantial impact on reducing consumption, and consequently, harm. Such price increases mean that there is less incentive for switching between different types of alcohol or drinking venues (for example by going to the pub if supermarket alcohol is getting more expensive) than in policies targeting price increases at certain products or market sectors. Pubs and supermarkets are equally affected by a general price increase, although it has been argued that supermarkets may be less likely than pubs to pass on such price rises to consumers.

Across-the-board price increases (covering all products in the on-trade and off-trade) tend to lead to relatively larger reductions in mean consumption for the population, compared to other pricing options.

Policies targeting price changes specifically on low-priced products or certain product categories lead to smaller changes in consumption, as they only cover a part of the market.

Minimum pricing is a policy which sets a minimum price at which a unit of alcohol can be sold. Price increases are targeted at alcohol that is sold cheaply. Cheaper alcohol tends to be bought more by harmful drinkers than moderate drinkers and studies show that it is also attractive to young people. So a minimum price policy might be seen as beneficial in that it targets the drinkers causing the most harm to both themselves and society whilst having little effect on the spending of adult moderate drinkers.

Approximately 27% of offtrade alcohol consumption is purchased for less than 30p per unit, compared to 9% in the on-trade. 59% of offtrade consumption and 14% of on-trade consumption is purchased for less than 40p per unit.

Increasing levels of minimum pricing show very steep increases in effectiveness. Overall reductions in consumption for 20p, 30p, 40p, 50p, 60p, 70p are: 0.1%, 0.6%, 2.6%, 6.9%, 12.8% and 18.6%. Minimum prices targeted at particular beverages are less effective than all-product minimum prices. Differential minimum pricing for ontrade and off-trade leads to more substantial reductions in consumption and harm (for example, pairing a 30p minimum price in the offtrade with an 80p on-trade minimum price gives a reduction in consumption of 2.1% compared to 0.6% for off-trade alone.

In relation to off-trade promotions and discounts (such as buy one get one free offers), just over 50% of all alcohol purchased from supermarkets is sold on promotion, although many of the discounts are quite small. Only quite tight restrictions on the level of discount offered would have noticeable policy impacts. For example, banning only buy-one get-one free offers has very little effect on consumption and harm. Bans on discounts only for lower-priced alcohol (less than 30p per unit) are also not effective in reducing consumption. A ban on discounts of greater than 20% (which would prohibit buy-one-get-one-free, buytwo- get-one-free and buythree- get-one-free) leads to overall harm reductions similar to a 30p minimum price.

A total ban on off-trade discounting is estimated to reduce consumption by 2.8%, although this may only prove effective if retailers were also prevented from responding by simply lowering their nonpromotional prices.

In regard to alcohol advertising, it is unclear whether advertising restrictions can be expected to have an immediate effect on consumption. The international evidence suggests that effects of advertising may be cumulative over time, and may work through influencing attitudes and drinking intentions rather than consumption directly. In regard to the savings for each policy the review has looked at relating to health harm, the general pattern is that the more restrictive the policy, the greater the harm reduction.

Higher minimum prices lead to greater harm reductions, and this goes up steeply – for example, there is relatively little effect for a 20p minimum price, but 30p, 40p, 50p and 60p have increasing effects. Similarly, a ban on just BOGOFs (buy-one-get-one-free) does not affect health harm very much, but banning discounts larger than 10%, or even a total ban on sales promotions in the off-trade lead to substantial estimated harm reductions.

For example: A 40p minimum price gives an estimated reduction of around 41,000 hospital admissions per annum.

A minimum price of 30p is estimated to reduce total crimes by around 3,800 per annum whereas a 40p minimum price is estimated to reduce crimes by 16,000 per annum and a 30p offtrade paired with an 80p on-trade minimum price by 68,000 per annum. An off-trade discount ban would lead to an estimated prevention of 14,000 crimes per annum, of which 4,000 are violent offences.

Crime harms are estimated to reduce particularly for 11-18 year-olds as they are disproportionately involved in alcohol-related crime and are affected significantly by targeting price rises at low-priced products. Crime costs are also estimated to reduce as prices increase. A 30p, 40p and 30p(off-trade)/80p (on-trade) minimum price is estimated to lead to direct cost savings of around £4m, £17m and £65m per annum respectively, whereas the value of gains in quality of life associated with decreased crime is estimated at £4m, £21m and £88m per annum respectively.

A ban on price promotions in the off-trade decreases direct crime costs by £18m per annum and the cost of quality of life lost by £25m per annum. It is important to note that different policies emerge as effective when compared to health harms: discount bans, targeting cheap off-trade alcohol and low minimum pricing options, which influence only the off-trade sector, are all less effective in reducing crime when compared to policies that also affect the on-trade sector. This is because many of the offenders are young males who purchase just over 75% of their alcohol in the on-trade.

The main conclusion of the study, overall, was that pricing policies can be effective in reducing health, crime and employment harm. Pricing policies can be targeted, so that those who drink within recommended limits are hardly affected and so that very heavy drinkers, who cause by far the most alcohol-related harm, pay the most. Minimum unit pricing and bans on alcohol discounting could save hundreds of millions of pounds every year in NHS, crime and employment costs. If policy makers wish to see the greatest impact in terms of crime and accident prevention, through reducing the consumption of 18-24 year old binge drinkers, they need to consider policies that increase the prices of cheaper drinks available in pubs and clubs as well as supermarkets.

The Independent Review report can be downloaded at:
http://www.dh.gov. uk/en/Publichealth/ Healthimprovement/ Alcoholmisuse/DH_4001740