Does NI drink trade really back minimum pricing?

Cor, blow me down, stone the crows and what have you – and on St Paddy Day too – the drink trade in Northern Ireland seem to have backed the medical establishment in England and Scotland’s bid to set a minimum price for alcohol which Gordon Brown turned down out of political funk even before the case was made. I suspect somehow that this isn’t the last word from the locals. The drink trade’s usual “responsible” line is put by the Portman Group. Rougher resistance has been put up classically by one of Mick’s muckers in the Telegraph blogs, Gerald Warner, who rails against the nanny state and bemoans the impact on pubs “already struggling to survive the consequences of the smoking ban and the recession. “ Not so , according to the definitive Sheffield University study commissioned by the English Health department. John Appleby of the King’s Fund makes the powerful general case in favour in the Guardian’s Comment is Free.

“The researchers found that a minimum price of 40p per unit of alcohol would reduce consumption – especially among heavy drinkers – and lead to a reduction in hospital admissions of over 40,000, savings to the NHS of nearly £120 million and, perhaps most importantly, a reduction in deaths of nearly 1,400 over 10 years. Taking account of impacts on crime and employment, it is estimated that over 10 years the full societal savings add up to £5.4bn. The political case may be harder to make

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You could say that John, with a weak government facing an uphill election struggle in a year’s time. Where does the Assembly stand?

  • Paul

    Of course they support minimum prices, it reduces the need for competitive pricing and increases the profit

  • slug

    Independent drink traders will be pleased at a minimum price because it stops Tesco, et al from undercutting them.

  • Uriop

    Look up the word “monopsony” if you’ve never heard of it.

    It’s very possibly in the financial interest of brewers to have minimum prices if a large part of the market is gouged by a few supermarkets, just as it would be for farmers to have a minimum price on cabbages or pork chops.

  • Comrade Stalin

    Of course they support minimum prices, it reduces the need for competitive pricing and increases the profit

    I do not see how increasing the minimum price improves competition. And that’s leaving aside the fact that increasing the price of a night out, or even a couple of pints after work, makes it less likely that people will patronize their bars and pubs.

    The other factor that the NI drinks trade does not seem to have accounted for is the existence here of the UK’s only land border. Alcohol smuggling, mainly of the casual kind, will become a problem if a significant price difference becomes apparent. It’s only an hour’s drive to the border from Belfast, and that makes it relatively trivial to go down and fill the boot with a long-term booze supply.

  • Uriop

    @Comrade Stalin

    I do not see how increasing the minimum price improves competition.

    It can improve competition **in the market for wholesale alcohol** i.e. a lower proportion of alcohol being sold by supermarkets, and a greater proportion being sold by smaller off licences and pubs. That would be good financially for brewers. It could also decrease total consumption. That would be bad for brewers. Which is more important would take an economist to work out, and I won’t pretend to have done the calculations. However the point I’d make is that it COULD increase profits for brewers.

    Many people do not understand monopsony power. We shouldn’t take the 100% brewer funded Portman Group’s recommendation as some kind of financial sacrifice on the part of brewers. It may in fact be the supermarket’s profits that would be hit by such a move and not theirs. Their own profits may increase.

    The archetypal example of monopsony power would be farmers and the supermarkets. A minimum price for meat and vegetables, at least up to a certain level, would definately increase farmer’s profits. Currently their profits are screwed down by the supermarkets acting as something of a buyer’s cartel.

    Also bear in mind that the Portman Group DO NOT represent publicans or off licences. They represent producers and brewers. What is in the interest of brewers need not be in the interests of publicans any more than the relationship between any retailer and their customers.

  • I wonder whether the genuises behind this idea worked out which beverages would be most affected by this plan, given that most binge-drinker favourites are pretty pricey? Cheap port and sherry, not known for being favourites of clushie Holylands students on St. Patrick’s Day would probably see the sharpest rise in price. While increasing the price of QC might be reasonable in terms of good taste and common sense, it doesn’t make a lot of sense in terms of targeting anti-social louts.