Cheap and discounted alcohol increases the demand for alcohol and encourages heavier drinking.
The introduction of alcohol (beer, wine and mead) into supermarkets (wine in 1989 and beer in 1999) had a considerable impact on lowering the price of alcohol. The price of any particular beer or wine is generally found to be cheaper in supermarkets than bottle stores.
The introduction of ready-to-drinks (RTDs or alcopops) also had a considerable impact on drinking, particularly on young people. They are relatively cheap and attractive to young people.
Increasing the retail price of alcohol is one of the most effective strategies to reduce accessibility and alcohol-related harm. It can be achieved in a number of ways including; increasing excise tax, introducing Minimum Unit Pricing, restricting the promotion of discounted alcohol.
Alcohol is subject to an excise tax. To learn more about excise taxes, click here.
The amount of excise tax varies by beverage type and alcohol volume in the beverage. Click here for the current excise rates in New Zealand.
The money collected by the Government from alcohol excise taxes goes into the wider pool of Government funds. Taxes are not tagged to any initiatives to reduce alcohol harm.
Alcohol is also subject to a special levy. This goes to the Health Promotion Agency to support their alcohol programme of work.
Excise tax increases are not always passed on to the consumer - sometimes the industry absorbs some of the increased costs.
Increases in excise taxes could generate significant revenue for the Government as well as result in significant cost savings from reduced alcohol-related harm.
In 2014, the Ministry of Justice examined the benefits of increases in excise taxes. The reportnoted that the matter would not be looked at again until 2019.
A Minimum unit pricing (MUP) policy can be used to increase the price of alcohol of the cheapest alcohol products in New Zealand. A MUP sets the minimum/lowest/floor price at which a standard drink of alcohol can be sold.
For example, if a minimum unit price of $1.40 per standard drink was implemented, it would mean that:
a twelve pack of (7%ABV) RTDs (containing 21.9 standard drinks) could not be sold below $30.62 (compared with a current price of $24.99),
a bottle of wine (containing 8 standard drinks) could not be sold below $11.18 (compared with a current price of $6.79).
Although a minimum unit price per standard drink would apply equally to on- and off-licences, price increases would generally be seen at off-licences. This is where the majority of cheap alcohol is sold.
There are significant cost savings estimated from implementing Minimum Unit Pricing, although not as great as savings arising from excise tax increases.
A MUP policy can only address the cheapest products. Therefore, it has the biggest effect on harmful drinkers who prefer the cheap products. To reduce consumption across the whole of New Zealand, we also need to increase excise taxes.
In 2014, the Ministry of Justice investigated a MUP policy. At the time a decision was made to wait five years, until 2019, when this matter would be looked at again. It was envisaged that this was sufficient time to examine the progress of the new Sale and Supply of Alcohol Act 2012.
Prohibiting single sales of alcohol products from off-licences
Some stores break up packages of alcohol and sell the individual units. This practice is sometimes referred to as “single sales”.
Communities often find that this makes alcohol particular accessible to young and other vulnerable people.
There is international evidence showing that selling single serves results in increased harm to young people. For this reason, many jurisdictions (particularly in the United States) ban single sales.
New Zealand law does not prohibit single sales.
Restricting single sales in New Zealand would mean that many young people would be unable to purchase a single RTD at a low cost. Click here for taking action on single sales.
Reducing the number of liquor outlets in a community
The density of liquor outlets can also have an effect on pricing and promotions.
When there are a high number of outlets, increased competition among retailers can result in lower prices.
Reducing the number of outlets in a community may have an effect of raising the overall price. Click here for taking action to reduce the density of alcohol outlets in your community.
