THE PRICE OF ALCOHOL

The price of alcohol 

The price of alcohol is closely related to its consumption. On average, people will drink less when alcohol is more expensive. Increasing the price of alcohol is one of the most effective strategies to reduce consumption and harm. A large body of high-quality research suggests that a 10% increase in price reduces overall alcohol consumption by 5%.

A 5% reduction in consumption in New Zealand would mean:

• 45 million FEWER bottles of beer (330ml)
• 7 million FEWER bottles of wine (750ml)
• <1 million FEWER bottles of spirits (1L)
• 14 million FEWER bottles of RTDs (250ml)

The retail environment has a huge impact on the price of alcohol. In New Zealand, supermarkets are major suppliers of beer and wine. In 2008, the two supermarket chains sold around 60% of all wine and just over 30% of all beer in New Zealand. It has been found that beer and wine sold in supermarkets is cheaper than the same products bought at bottle stores. Many bottle stores buy their alcohol for sale from supermarkets, given they cannot obtain the alcohol at the same price from their own suppliers.

In New Zealand, alcohol products sold at off-licences have become more affordable over time. This means that it now takes us less time to earn enough money to buy an alcohol product.

When there are many outlets in a community, competition can force retailers to discount the price of their alcohol in their stores so that they can ‘win’ the purchase.

Price differences between different types of alcohol outlets may also lead to more alcohol-related harms in a community. For example, spirits purchased from an on-licence can cost 9 times more than those purchased from an off-licence. This is likely why off-licences in New Zealand are now selling approximately 75% of all alcohol sold in New Zealand. It also means that more people drink in their homes or other’s homes, which can often be risky settings. New Zealanders commonly drink at home or other private settings prior to entering pubs and bars in town. In 2010 in New Zealand, 73% of the total volume of absolute alcohol was consumed in private homes (own home, other's homes).

There are several ways that the price of alcohol can be increased:

1. Increasing excise taxes on alcohol products
   
2. Setting a minimum unit price at which alcohol can be sold 
3. Restricting or banning heavy discounts on alcohol.

We need a combination of all of these approaches in order to reduce alcohol consumption and harm.

For a detailed report on alcohol pricing policies in Aotearoa, click here ROADMAP FOR ALCOHOL PRICING POLICIES