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Dublin, Ireland
Hi, I'm a Master of Wine (MW) having passed in 1997. I am about to open a wine shop in DĂșn Laoghaire, Ireland, called The Wine Library and this is my wine blog. There should be no conflict of interest between my work with The Wine Library and the opinions expressed herein but I will do my utmost to be fair and responsible in my posts – please read my Who Pays article. I have worked in wine education, retail, and consultancy. From June 2013 until May 2017 I was the Retail Manager for The Wicklow Wine Company. I was a member of the Council of the Institute of Masters of Wine (IMW) from 2008 to 2014 and was also a member of the Events, Trips and Governance Committees Having had problems with potentially libellous comments from unidentifiable posters, I now require that if you post a comment, you must identify yourself properly or it won't be published. Please note that I do not review products or services on request so kindly don't ask. I value my independence and I believe my readers (few that they may be) do so also.

Monday, March 14, 2011

Minimum pricing - saviour of the small off-licence?

On Friday last I was in London for an MW course day, in our lovely new offices on Fitzroy Square. One of the questions we discussed was from Paper 4 last year - Is wine a social evil? In the discussion I mentioned that, in my opinion, we are not far from a situation where a Loi Evin style ban on alcohol advertising is likely to be enacted in the UK and Ireland, and where minimum pricing of alcohol is also likely. These ideas usually bring about a fierce response from the drinks industry but it's worth considering whether there are more than just health benefits to these ideas.
First off you should read any of these BBC articles on falling consumption in the UK, on alcohol pricing, on the health benefits of minimum pricing and  this article in The Lancet also on alcohol pricing. It is also worth noting that Irish health policy for the last 20 years has been to follow the World Health Organisation's view that pricing is the most effective way to combat alcohol-related health issues. If, by any chance, you haven't read anything on this to date then, forgive my French, but you're an idiot - these are serious issues and being ignorant is of no benefit to anyone!
OK, the basic idea is that alcohol causes a huge degree of health issues in society - this we have to accept as true, otherwise we are really just burying our heads in the sand. If you believe that wine is not one of the social evils then you're also an idiot - there are plenty of wine drinking alcoholics out there, many of whom engage in some form of abusive behaviour as a result: for every lager lout there's also a pinot grigio prat!
If alcohol prices are raised, it appears, then consumption reduces, especially in the particularly vulnerable 18 - 25 age group. The cost to society in terms of funding health services reduces, lifestyle illnesses reduce and, all in all, we are healthier and happier. The industry usually responds with cries that alcohol is already a high cost item due to government taxes and that raising prices simply means that the alcoholic wastes more money rather than less. I've thought about this and while this would have been a position I held some time ago I no longer agree with this.
Among problem drinkers there is a hard core of serious alcoholics who will drink themselves to death no matter what the cost - social, personal or economic. However, they probably do not represent the majority of problem drinkers - the people who clog up A & E departments every weekend with a wide range of avoidable injuries, the people who engage in violent behaviour, who abuse their families, who cause countless road accidents and so on. We have to ask where does our social responsibility lie? Is it to look at the bigger picture and try to improve society or is it to simply take a self-interested short-term view? If the latter, then head off to the bankers and developers whose similar attitude bankrupted our country!
But, the question I raised at the start is whether or not there is a benefit to the industry? Well, for the small scale industry I think there is. Minimum pricing would prevent large scale discounting of product, below-cost selling and a range of other "promotional" activities which are, to some extent, putting a lot of small off-licences out of business. I put promotional in quotation marks because these activities do not promote the benefits of wine, for example, but only the profits of large wholesalers and supermarkets.
One of the current economic issues facing Ireland is that if small local businesses go under then the economy will take longer to recover. Yes, big corporations employ large numbers and pay substantial taxes but local economic success is vital if the whole country is to recover. If the big players are prevented from selling below cost that won't cost jobs - no profit being made now and jobs held suggests that when profits are made jobs can stay. They'll argue that turnover will reduce due to higher wine costs but I don't believe that. Instead, I think we should look for minimum pricing as a means of ensuring that small businesses stay up - that doesn't mean, by the way, that those which are inefficient or which offer no service should survive but that those who are under pressure due to activities in which they cannot engage should be given a level playing field.
Further, we have a problem with alcohol consumption in this country and it's time we faced up to it. It's like the smoking ban or the drink driving legislation - it's coming in and the best way to respond is to start figuring out now how you will respond when it actually happens. Some things are inevitable - death, taxes (and, if you're a poker player, the river!) - so start planning now and you'll be fine. One way or another, I think minimum pricing will occur and I'm not sure it won't be a good thing in the long run.

4 comments:

Rob Quinn said...

Really interesting points raised.

I'm just curious if how you feel that this would effect the peoples entrance into drinking wine, like students?

I run a wine blog for students, and it's hard enough to get people to put down the pint and get into grapes. This could be 'elitlising' wine further if the minimum pricing rate was too high. The example that comes to mind is that wines like Valpolicella Ripasso's that a student might buy with a friend will most likely jump up a few Euro in price, and that can especially with students, squeeze a wine out of the budget.

I can't disagree that it would cause a lot of good, it'd remove the German "wines" and let wines from places like Mosel really shine, and it might knock a lot of €4-5 'wine's out there off the market, still I am curious, do you think that we could risk simply raising the prices of wine universally and making the €4 plonk into €10 plonk and the lovely bottle that you've found at €9 into one you can't afford any more?

Anyway, fair play for raising the question of consumption! I'm also involved in a lot of Mental Health issues in college and I often wonder how many of the problems could be put down to a misuse of alcohol!

Eoin said...

Minumum pricing was recently attempted in Scotland. 45p per unit of alcohol was the proposal put to the parliament. Opponents for the industry opined that this would raise the price of an average bottle of Scotch to £12.16 or thereabouts and would potentially affect exports. Anyway when it came down to it the proposal was defeated. So no min pricing for Scotland.
One of the problems that that I came across when researching the alcohol and health issue is that the industry are heavily involved in policy making/advising, which will always make it difficult for goverments to enact tough legislation in the interests of health. WHO regards the industry as a stakeholder, yet in most countries their appear to be a partner. The question of pricing as a control is one of access really isn't it? Is that not why in Ireland they reigned in the offlicence opening hours after a brief relaxation of them and the introduction of 24 hour drinking caused major problems in the UK?
There are other ways to control access as well as through pricing, like the state alcohol monopolies in Nordic countries (who incidentally also have some of the highest taxes on alcohol). They still have alcohol related health issues though!

Cathal Mc said...

Yes, the promotional activity of supermarkets is severely damaging the small local traders but I have not seen a minimum pricing mechanic that will solve this. There are 2 mechanics in circulation. 1 is the Scottish model above. The other is to set a minimum price of duty plus the VAT on duty. In Ireland, that would set the minimum price of a bottle of wine at €2.40!
The most either of these options would achieve is to raise the price of the very cheapest of beverages while not touching everything else.
IMO a return to the imperfect ban on below cost selling is the only solution that will achieve anything. The Govt would have to set a formula for determining an acceptable 'cost price' based on ex-cellar prices in order to avoid the previous practice of artificial invoice prices.
I don't think they will do this as it will be difficult to get past the competition authorities. Never forget that Tesco have a turnover of over €75 billion and employ nearly half a million people worldwide. When they say jump, governments will jump.

Dopey Jim said...

We all have to remember that it is deeply ingrained within human history and society to use drugs. Alcohol has become the drug of choice for most people due to historical, economic and social pressures. To introduce minimum pricing risks a regression to poorly made and potentially dangerous beverages (I'm thinking about homemade hooch such as vodka and poteen). We need to educate people from a very young age to be aware of the dangers of all drugs both legal and illegal and ring fence a lot more of the money that is made by the industry and taxes for education, addiction treatment and rehabilitation.
Wine per se is not a social evil but the excessive peddling of cheap alcohol with the express intent of encouraging people to get blind drunk is. Why else can I buy 2 litres of truly disgusting "liebfraumilch" or White Lightening at my local, it certainly isn't to discuss the fineness of either one of these drinks it is purely to encourage people to get drunk and feed their addictions.
As with most addictive behaviour there are often underlying social causes poor education, lack of prospects, childhood abuse, learned behaviours etc.
There are no easy answers and I'm not sure that minimum pricing even has a place within the solution.