Sheffield report analyses effects of alcohol pricing and promotion policies

Sheffield report analyses effects of alcohol pricing and promotion policies

A University of Sheffield report, commissioned by
the Department of Health to help Government Ministers decide future
alcohol policy, shows that policies which lead to price increases reduce
alcohol consumption and can have significant effects on reducing
alcohol-related harm.

The findings, which were published as part of a
consultation document by the Department of Health, are the results of
the second phase of an independent review. As part of the review the
Sheffield researchers examined the potential effects of different
pricing policies on patterns of alcohol consumption and hence on the
nation’s health, crime, absenteeism in the workplace and unemployment.

To compile the report the Sheffield team analysed over 40
separate policy scenarios, including setting minimum prices per unit of
alcohol at different levels and bans on price-based promotions in off
licences and supermarkets. The research examines how policies affect
alcohol purchasing and consumption by different population groups,
including moderate, hazardous, harmful and underage drinkers both in the
on-trade (such as pubs, clubs and restaurants) and the off-trade
(supermarkets, off licenses) sectors.

The terms moderate, hazardous and harmful drinkers relate
to how much people drink, and are the standard definitions used by the
Office for National Statistics and others. Moderate drinkers are those
who drink within current UK guidelines (they do not regularly drink more
than 4 units per day for men or 3 units per day for women).  Hazardous
drinkers are those who drink above these guidelines, but do not consume
more than 50 units per week (men) or 35 units per week (women). These
levels are associated with increased long-term risks for health and
social harms, and many of these drinkers also put themselves and others
at risk during binges. Harmful drinkers are those who drink more than 50
units per week (men) or more than 35 units per week (women) – a level
of drinking which has been associated with a high risk of both acute and
chronic harms.

Dr Petra Meier from the University of Sheffield’s School
of Health and Related Research (ScHARR), who led the study, said: “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 and lead to
considerable financial savings in the NHS, criminal justice system and
in the workplace.

“Our results also show that targeting price increases at
cheaper types of alcohol would affect harmful and hazardous drinkers far
more than moderate drinkers. Of course these heavier drinkers, by
definition, 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 major findings of the University of Sheffield research are summarised below –

1.      What are the policy effects of introducing across-the-board price increases?

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.

2.      What are the policy effects of an introduction of minimum pricing?

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 off-trade alcohol consumption is
    purchased for less than 30p per unit, compared to 9% in the on-trade.
    59% of off-trade 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 on-trade and off-trade
    leads to more substantial reductions in consumption and harm (for
    example, pairing a 30p minimum price in the off-trade with an 80p
    on-trade minimum price gives a reduction in consumption of 2.1% compared
    to 0.6% for off-trade alone.

3.      What are the effects of banning off-trade price promotions – buy one get one free, 10% discounts, etc?

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 not effective in reducing consumption.
  • A ban of discounts of greater than 20% (which would
    prohibit buy-one-get-one-free, buy-two-get-one-free and
    buy-three-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
    non-promotional prices.

4.      What would be the effect of banning alcohol advertising?

There is some uncertainty over the mechanisms linking
advertising to consumption, and thus 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. Appropriate UK
data are not available and we have been limited to exploratory analyses
based on the international literature.

5.      What are the savings for each policy the review has looked at relating to health harm?

The general pattern here 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.
  • The financial value of avoided mortality and morbidity
    is valued using direct (NHS) costs avoided and also using the
    quality-adjusted life years (QALY) measure. For both, higher prices lead
    to increased savings. The annual direct costs savings from a 40p
    minimum price are estimated at £116m, for a 30p (off-trade)and 80p
    (on-trade) minimum price pairing £72m, and from a total ban on price
    promotions £111m, the corresponding quality of life-related savings are
    estimated at £424m, £254m and £415m.

6.      What are the savings for each policy you have looked at relating to crime?

The review takes into account estimated reductions in the
absolute number of violent offences, thefts, robbery, criminal damage
and other crime and the corresponding savings in prevention, detecting
and prosecuting. The researchers also valued the effect of reducing
crime on the quality of life of victims.

  • 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 off-trade
    paired with a 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.

7.      How would absences from work and unemployment be affected by each of the policies?

Generally, all policy options that target harmful and
hazardous drinkers are effective in reducing alcohol-related harm in the
workplace. 

  • Unemployment due to alcohol problems occurs mainly in
    the harmful drinker group and is estimated to reduce as prices increase:
    e.g. 3,800 avoided unemployment cases per annum for a 30p minimum price
    versus 12,400 for a 40p minimum price.
  • Absence reductions occur mainly in the hazardous and
    harmful drinker groups: e.g. for a 40p minimum price, the 100,000
    estimated reduction in days absence per annum includes 35,000 days for
    hazardous and 55,000 days for harmful drinkers.
  • The largest financially valued component of harm avoided
    due to policy changes is in the estimated unemployment reductions,
    valued at £303m per annum for a 40p minimum price and £173m at a 30p/80p
    off-trade/on-trade minimum price.

8. What are the overall financial savings that might be expected as a result of different pricing and promotion policies?

The majority of the policies appraised have estimated
total reductions in harm valued over £500m and some are valued higher
than £5billion over a ten-year period.

FAQS prepared by ScHARR Research Team

9.      Following your study what policy would you recommend to the government? Is there a clear winner?

We do not see it as our role to recommend a policy to
government. Instead, we have looked at a range of policies, and modelled
the likely effects each policy option would have on consumer spending,
reducing consumption, and reducing health, crime and workplace harms. A
number of effective policy options have been identified and it is now up
to government to decide which policy option, if any, they feel strikes
the right balance between consumer interests and reduced harm to
society.

10.      Would supermarkets and pubs lose out on
revenue with minimum or higher prices or bans on promotions? Would the
Government gain more from duty and VAT?

No, both off-trade and on-trade retail sectors would see
increased revenue from price-based policies such as minimum pricing.
Policies vary, but typically a 1% price increase is estimated to produce
around a 0.5% reduction in volume purchased.  Therefore, retailers
would sell less volume, but at higher prices, leading to an overall
increase in sales value. This effect is seen in supermarkets and
off-licenses, and also in pubs, clubs and restaurants. Most price
polices have only small effects on revenue for the Exchequer, as duty
receipts fall (these are related to volume sold) but VAT receipts rise
(related to sales value).

11.      Would  the suggested strategies penalise moderate drinkers?

Most policy options affect moderate drinkers in a very
minor way, simply because they consume only a small amount of alcohol
and also because they do not tend to buy as much of the cheap alcohol
that is targeted by minimum pricing and promotion bans. Harmful drinkers
buy more alcohol and also tend to choose cheap alcohol; therefore these
would be most affected.

  • Changes in spending per drinker are proportionate to the price increase associated with each policy.
  • As might be expected, those who buy the most alcohol are
    affected the most, so changes in spending are expected to be greatest
    for harmful drinkers, with hazardous drinkers somewhat affected and
    moderate drinkers affected very little. This is particularly so for
    policies that are targeted at cheap alcohol.
  • Moderate drinkers would be predicted to spend on average about 11p extra per week if a 40p minimum price was introduced.

12.      Who would benefit from the strategies, eg. moderate, hazardous or harmful drinkers, young people?

The policies we have analysed do impact on the different
drinker groups in different ways, in terms of both effects on
consumption and also benefits in terms of reductions to health, crime
and workplace harms.

  • Harmful drinkers are expected to reduce their absolute
    consumption most. In the more effective policy options they spend
    significantly more on their alcohol purchases.
  • Significant health benefits are estimated for harmful
    drinkers (particularly deaths avoided), and important health gains also
    occur in hazardous drinkers. Underage drinkers and young binge drinkers
    benefit less from health harm reductions because their baseline levels
    of risk for many alcohol-attributable diseases are low at such young
    ages.
  • Moderate drinkers are affected in only very small ways
    by the policy options examined both in terms of their consumption of
    alcohol and their spending. However, even though moderate drinkers are,
    individually, at lower risk of health-related harms, they comprise a
    sizeable element of the population and so the small changes in their
    consumption feed through to small changes in risk but a considerable
    cumulative change in population health.
  • Compared to health harm reductions, a much larger
    proportion of the crime-related harm is due to reduced drinking in the
    underage and 18-to-24-year-old hazardous drinker groups. When estimating
    policy impacts, crime avoided is due more to consumption reductions in
    the harmful and hazardous drinking groups than the moderate group.

13.      Where has all your data come from?

Most of the modelling is based on a fresh analysis of
existing UK data sources on consumption, price promotions and harms. For
example – via the General Household Survey – the model includes the
patterns of consumption for over 14,000 people in England in 2006; and –
via the Expenditure and Food Survey – individual alcohol purchases in
England between 2001/02 and 2005/06. Whilst we have checked that our
findings are consistent with what is known about alcohol policy
internationally, a lot of effort has gone into ensuring that the data
underpinning the model are both recent and UK-based.

14.      Could you summarise your most important findings?

  • 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 discount bans 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. 

Notes to Editors:

The report:

Full Title:

INDEPENDENT REVIEW OF THE EFFECTS OF ALCOHOL PRICING AND PROMOTION: Part B

Modelling the Potential Impact of Pricing and Promotion
Policies for Alcohol in England: Results from the Sheffield Alcohol
Policy Model Version 1.0

Authorship:

Modelling Team: Alan Brennan, Robin Purshouse, Karl Taylor, Rachid Rafia

Principal Investigator: Petra Meier

Research Team: Andrew Booth, Daragh O’Reilly, Tim Stockwell, Anthea Sutton, Anna Wilkinson, Ruth Wong

For a full copy of the report please visithttp://alcoholreports.blogspot.com/2008/12/independent-review-of-effects-of.html.

The full report of the first phase of the project, a
systematic review of the international research evidence on alcohol
pricing, promotion, consumption and harm, is published alongside this
report, and can be found on ….

For further information or to arrange an interview with one of the researchers please contact: Jenny Wilson, Media Relations Officer on 0114 2225339 or email j.c.wilson@sheffield.ac.uk