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Neil Miller - NZ

Will a minimum price for alcohol hurt craft beer?

New Zealand is currently consumed by one of our regular paroxysms of angst regarding our alcohol laws and restrictions.  Actually, we are concerned about elements of our drinking culture but, rather than addressing that specific issu,e Kiwis – particularly our politicians and public health lobbyists - seem to prefer huge sweeping legal changes in order to be seen to be “doing something” about problem drinking.   

The Government has put forward a raft of changes, including a likely lift in the purchase age, more restrictions relating to liquor licences, shorter opening hours and banning smaller stores from selling alcohol.  Predictably, these quite drastic changes have been derided by some opponents as “not enough” or even “timid”.

One idea which is currently receiving a lot of airtime is a minimum price for alcohol, particularly after the policy was adopted by England, Wales and Scotland.  Australia is considering a similar move.

Here, the New Zealand Labour Party, through front bencher Charles Chauvel, has drafted an amendment which would allow the Minister of Justice to set a minimum price for a unit of alcohol.  They say they have the numbers to push it through despite the National Party’s scepticism that the measure would work. 

In the TVNZ article (http://tvnz.co.nz/national-news/minimum-booze-price-could-see-all-liquor-prices-rise-industry-4953805), Mr Chauvel said "It's very easy for particularly young women to pre-load with cheap wine from the supermarkets and then go out on the town and get drunker and drunker.  If instead of being able to buy a bottle of cheap wine for $6 from the supermarket, a minimum pricing regime puts that up to 12, 13 or 14 dollars then it's much harder people to lay their hands on cheap booze.”

John Albertson, from New Zealand's Retailers Association, warned "If you set a minimum price then obviously people who want to have a premium position for their wine for example may want to put a little bit more on, so the cost could go up all the way through the chain."

 

Prime Minister John Key has become involved in the debate saying he is not convinced a minimum price for alcohol would work.  In his view, it could force people to drink poorer quality liquor, instead of drinking less.  However, he has instructed Government officials to examine the issue in case the Labour amendment passes.

 

Unusually, the focus of the controversy has been supermarket wine.  Traditionally, most media stories about problem drinking tend to focus specifically on beer and pre-mixed spirits, despite the telling statistic that beer consumption has been dropping for twenty years.  Certainly most problem drinking stories are illustrated with pictures of beer even if the story about alcohol in general.

 

The Law Commission, whose report formed the basis of the reforms, says one standard drink of wine can be bought in New Zealand for as little as 60 cents, spirits for 81 cents and beer for 85 cents.  So, beer is already the most expensive.  If Mr Chauvel’s previous suggestion of $2 a unit is adopted, there will no bottles of wine under $16 and no six packs of beer under $12. 

 

Because most craft beers are currently priced over the $2 a drink threshold, it could be argued that they will become closer in price to mainstream beers which might encourage drinkers to “trade up”.  However, the costs to the big breweries will not have increased and they will basically be making more money for the same beers.  This means they will be able to increase marketing and distribution efforts.  Mr Albertson’s point about minimum pricing putting pressure all the way up the chain is critical. 

My personal opinion is that alcohol is not overly cheap in New Zealand compared to similar jurisdiction.  Minimum pricing is unlikely to help the craft beer market, though its biggest impact will be on cheap wine and spirits.  A high minimum price is unlikely to change the worrying elements of problem drinking in our culture but will force those who enjoy a responsible drink to pay more for the privilege.   


Cheers                                              
 
Neil Miller

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