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Study shows that minimum pricing lowers high-alcohol drink consumption

By in News

CUP Ottawa Bureau Chief

If the prices goes up, will you drink less? Studies show that you probably will.

OTTAWA (CUP) — A team of researchers led by University of Victoria professor Tim Stockwell concluded raising the minimum price of beverages with high alcohol content reduces their consumption. A study focusing mainly on pricing strategies in Saskatchewan concluded that prices should be raised for any drink over 6.5% alcohol content.

“I’ve always been aware of how important pricing is,” said Stockwell, who previously lived in Australia. “When I came to Canada in 2004 I was asked to write a paper for the national alcohol strategy about the potential of tax and price strategies. I reviewed the literature and encountered minimum pricing strategies and got quite intrigued by it.”

The study looked primarily at Saskatchewan, where minimum pricing was implemented in 2010. Strong alcohols were sold for 10 per cent more, which lead to an average of 8 per cent decrease in consumption of wines, beer and spirits. The largest product affected was high strength beer, with a 22 per cent decrease.

“The big driver here is beer,” said Stockwell. “Almost half of all alcohol consumed is beer, so you’re going to get some trickle down effects … people compensating for not drinking cheap beer and trying to get cheap other things. “

Stockwell and his colleague Norman Geisbracht said minimum pricing is a more effective way of reducing consumption than public awareness campaigns.

“Often incentives are set up the wrong way — the stronger alcoholic drinks are cheaper and the less hazardous drinks are more expensive,” said Stockwell. “All the incentives seem to be geared towards giving people access to cheap, high-strength alcohol.”

“We know from previous research that the price of alcohol is one of the most powerful ways to control overall consumption and overall consumption is related to harm from alcohol in a society,” Geisbracht added.

One of the most impacted groups is high-risk drinkers — those looking to get extremely drunk on a low budget. Raising minimum pricing means either reduced drinking patterns or a turn to cannabis, which is the closest substitute.

However Stockwell said there can be social and economic benefits to minimum pricing. Less intoxicated people means less accidents and a less money spent on health care.

“If you raise minimum prices,” said Stockwell, “you also increase the profits. That is direct revenue. More money would go towards hospitals, schools, roads, infrastructure and treatment for people with addiction problems.”

David Gray, and economics professor at the University of Ottawa, said there are potential negative impacts as well, such as a black market emerging or a decrease in revenue.

“Black market is always a possibility,” he said. “The higher they raise the minimum prices, the greater the incentive for moonshiners and bootleggers to set up shop.

“If you raise the price of just about anything, all other factors help constant, consumers are going to respond by cutting back on their purchases,” Gray added. “Any increase in revenue, which they forecast, will probably be less than they expect for that reason.”

Gray said most economists do not favor tampering with pricing and consumption control would be better achieved with taxes or social awareness campaigns.

According to Stockwell, the next phase of the study, which is pending approval for funding, will look further at social and economic effects of minimum pricing on strong alcohol.

“If you raise minimum prices … you could also increase the profits,” said Stockwell. “That is direct revenue. More money would go towards hospitals, schools, roads, infrastructure, and treatment for people with addiction problems.”

Photo: lanier67/Flickr

  • Graison Swaan

    Talk about rocket science! Increase the price of something and people buy less of it! No wonder everybody doesn’t have an iPad.

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