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.
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 or lowest price at which a standard drink of alcohol can be sold.
For example, if a minimum unit price of $1.20 per standard drink was implemented, it would mean that the lowest an RTD containing 1.4 drinks could be sold is $1.68 and a $7.00 bottle of wine (containing 7.2 standard drinks) could not be sold below $8.60.
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. Because that 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. It therefore 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.