The cost of below-cost alcohol

Between The Lines
Empty cans

The cost of below-cost alcohol

Below-cost selling of alcohol has been linked to the rise in alcoholism, teenage drinking and even suicide. Anton McNulty looks at the issues surrounding it.

In 2005, at the height of the Celtic Tiger, Eddie Hobbs’s ‘Rip-Off Republic’ TV show highlighted the cost of living and working in Ireland. The series was described as a ‘phenomenon’, attracting record viewing figures and making Hobbs an overnight star.
When the programme aired, Irish consumers still had plenty of money in their pockets, but they were incensed that they were being ‘ripped off’ by retailers of every ilk who were taking advantage of the situation by overcharging for goods and services.
Ever eager to please the masses, the Fianna Fáil/PD government at the time acted fast, and the then Minster For Enterprise, Micheál Martin, moved to abolish the ‘Groceries Order’. The move was welcomed by the National Consumer Agency, which predicted that the move would lower grocery bills for householders by up to €100 a month.
The order was scrapped in March 2006, but by the end of the year there were calls to review the decision. It emerged that the price of food had not fallen. However, the price of alcohol had fallen by 8.1 per cent.
Last week the issue of below-cost selling of alcohol was brought to a head following the call by John Higgins in The Mayo News to end the practice, which he believes is the cause of the emergence of house parties in Ireland. Mr Higgins’s son, David, committed suicide last March after a house party at which large volumes of alcohol were consumed.
“If you go into any supermarket there are aisles of alcohol … and its price and availability are well within youngsters’ reach,” Mr Higgins said, adding that he would like to see ‘a minimum price on drink’. If drink was more expensive, he said, it would prevent people from ‘stacking up’ and having house parties after the pubs close. “If you pay €4 a can for cider you are not going to invite 20 around to drink it. But you can buy cider for €1.20 a can, which is as cheap as a can of coke – that is crazy.”
Last month, the Minister of State for Health, Roisín Shortall revealed plans to end the sale of cheap alcohol in supermarkets by imposing a minimum price for alcohol. She has been supported by Alcohol Action Ireland who believe a rise in alcohol-related injuries and deaths is linked to the increased availability, affordability and marketing of alcohol.

Alcohol for pocket-money
“Alcohol is cheaper than it has ever been and is more widely available than ever,” said Fiona Ryan, Director of Alcohol Action Ireland.
“We have alcohol at pocket-money prices. A woman can reach her low risk weekly drinking limit for less than €7 and a man can do it for less than €10. That is, on average, less than the one-hour work-time minimum wage.”
Alcohol Action Ireland advocates the minimum-pricing strategy, as it believes it will have little impact on moderate drinkers, but will affect heavy drinkers and those who tend to regularly buy the cheapest products.
Only last week, Scotland became the first country in Europe where alcohol is sold relatively freely to propose the introduction of a minimum price for alcohol based on strength. Scotland consumes the most alcohol in the UK, and the ruling Scottish National Party proposes to introduce the legislation to tackle alcohol misuse in the country.
The SNP had previously proposed to introduce a minimum price of 45p per unit of alcohol, but the idea was rejected. How the Scots progress in this new policy is likely to be watched very closely by other governments, including the Irish, but it is not expected to be all plain sailing.

Legal obstacles
Already there are musings that such a move could be open to legal challenges and might fall foul of European competition law. Minimum prices for tobacco on health grounds were ruled unlawful by the European Court of Justice and in 2009 it said in order for minimum pricing to satisfy the law it would have to show it was in proportion to the problems caused by alcohol, without unduly restricting competition.
Alcohol Action Ireland and unlikely ally, the Vintners Federation of Ireland, believe that solely  raising taxes will have no effect on prices in supermarkets.
“Increasing excise will only punish the moderate drinker and will not tackle the main culprits, which are the supermarkets,” said Padraig Cribben of the VFI. “The big multiples can absorb tax increases on alcohol and will continue to sell alcohol drinks cheaply as a loss leader while pushing up the price of other products, especially food, to compensate.”
Since 2006, large supermarkets have reshaped their premises to include larger alcohol aisles stocking more quantities and varying brands of alcohol at lower prices. In the run-up to Christmas, the stocks of alcohol in supermarkets will get higher, and they will start to advertise special-priced alcohol as often as frozen turkeys.
The supermarkets have often taken the flak for the selling of below cost alcohol. In response, they point to the fact that they have voluntarily signed up to a code of practice regarding the selling of alcohol in their stores.
The code includes separating alcohol products from other beverages and food products and displaying the alcohol ‘as far [away] as possible, so that customers do not have to pass through or by it unless they intend purchasing alcohol products’.
David Fitzsimons, Chief Executive of Retail Excellence Ireland, which represents a number of supermarkets, said that in relation to alcohol they view the use of alcohol as a footfall driver as ‘anti-social’, and would ‘interact’ with the government regarding alcohol regulation.

Swedish model
One country that has stringent controls over the selling of alcohol is Sweden where alcoholic beverages containing more than 3.5 per cent volume can only be sold in a government-owned chain of stores called Systembolaget.
While the legal age to buy alcohol in Sweden is 18, you must be 20 years or older to buy from a Systembolaget and discounts like ‘Buy one, get one free’ are prohibited.
However, as it is a monopoly, the price of alcohol can be quite expensive. Since Sweden joined the EU with the concept of the free movement of goods, many Swedes now take ‘booze cruises’ to Denmark and Germany to stock up on cheaper drink.
This exact same scenario would happen in Ireland, argues Chairman of the Consumers Association, Michael Kilcoyne, who feels that people will just cross the border to get cheap alcohol.
“Generally I am not in favour of minimum pricing because it distorts competition, but I am in favour of maximum pricing.
If a minimum price is put on alcohol, it will reduce competition and will force people across the border to buy cheap alcohol …and if they go there to buy alcohol they will also buy other goods.
“There is no evidence that making alcohol more expensive will stop people from buying it. They have made cigarettes more expensive, but there is no evidence the number of people smoking has dropped. People who want to abuse alcohol will always get the money to abuse it.”
While there are arguments to be heard on both sides of the minimum-pricing strategy, one thing is certain: Ireland is reeling from the impact of alcohol, and something needs to be done or her citizens will continue to stagger and fall. We cannot keep asking society to bear the cost. Just ask John Higgins.