BEYOND TAX: THE NEED FOR RESEARCH ON ALCOHOL PRICING POLICIES
Version of Record online: 5 FEB 2010
© 2010 The Authors. Journal compilation © 2010 Society for the Study of Addiction
Volume 105, Issue 3, pages 397–398, March 2010
How to Cite
CHALOUPKA, F. J. (2010), BEYOND TAX: THE NEED FOR RESEARCH ON ALCOHOL PRICING POLICIES. Addiction, 105: 397–398. doi: 10.1111/j.1360-0443.2009.02863.x
- Issue online: 5 FEB 2010
- Version of Record online: 5 FEB 2010
Numerous factors influence the price of alcoholic beverages, from the type and quality of the product to where it is purchased. While higher excise taxes on alcoholic beverages are the primary policy lever for raising prices, there are a variety of other policies that do the same. In contrast to the large and continually growing body of research that shows that higher alcoholic beverage excise taxes, by raising price, reduce drinking and its consequences [1,2], almost nothing is known about the impact of policies regulating wholesale and retail distribution and pricing. The same is largely true when it comes to understanding the impact of policies that target the industry pricing promotions that can vary with quantity, location and other factors.
In their paper in this issue of Addiction, Meier and her colleagues add to the very limited evidence base on these issues . Using unique data from England that include a variety of measures of the types and quantities of alcoholic beverages consumed, where these beverages are purchased, and the prices paid for them, they explore the potential impact of a range of policies that affect alcoholic beverages prices and drinking among different population subgroups. Consistent with extensive previous research, they find that alcohol prices have a significant impact on drinking behavior—from choice of beverage and location to the quantity consumed. Their unique contribution, however, is in demonstrating that policies that impact prices differentially—from minimum pricing policies to bans on discounting—have different effects on drinking that vary with the type of drinking (e.g. moderate, hazardous and harmful) and across drinkers (based on gender and age). As Meier and her colleagues conclude, a mix of policies that target price is called for when governments adopt pricing policies aimed at curbing the harmful consequences of drinking.
As the authors note, the approach they have taken can be adapted to other countries where there are similarly complex policies that have different effects on alcoholic beverage prices. Such research would be quite timely in the United States. Following the repeal of Prohibition in the United States, states adopted many varied combinations of policies governing the wholesale and retail distribution of alcoholic beverages as part of the creation of a ‘three-tier system’ for alcohol distribution . These include state control over wholesale and/or retail distribution of at least some beverages (which allows the state to directly set prices for the controlled beverages), minimum pricing policies, bans on quantity discounts, requirements that wholesalers post and hold their prices and limits on price promotions (e.g. bans on ‘happy hour’ specials and free samples). However, research on the impact of these policies on the prices drinkers pay for alcoholic beverages, drinking behavior and the consequences of drinking is almost non-existent .
In recent years, these policies in US states have been eroding in the face of legal challenges from the alcoholic beverage industry over their perceived anti-competitive effects. In Maryland, for example, one large regional retailer has challenged the state's ban on quantity discounts for wine and spirits at the wholesale level and the related price post-and-hold requirements (TFWS v. Schaefer et al.). In Washington, a large national retailer has challenged a broader set of policies regulating wholesale distribution that includes minimum mark-up, cash payment and direct deliver provisions, in addition to the state's ban on quantity discounts and related post-and-hold requirements (Costco v. Hoen et al.). The states have used a ‘21st amendment’ defense to oppose these legal challenges, arguing that these policies are consistent with the state interests in promoting temperance and reducing the harms from excessive drinking and the authority granted to states by the constitutional amendment repealing Prohibition. To date, states' ability to defend these policies has been hampered by the lack of published evidence on the impact of these policies on alcoholic beverage prices, drinking and its consequences. The type of evidence Meier and her colleagues' provide for England, adapted appropriately to the US environment, would be invaluable in responding to the inevitable future challenges to comparable policies in other states.
Declaration of interest
The author has served as an expert witness on behalf of Maryland (in TFWS v. Schaefer et al.) and Washington (in Costco v. Hoen et al.).
- 2The effects of price on alcohol use, abuse, and their consequences. In: BonnieR. J., O'ConnellM. E., editors. Reducing Underage Drinking: A Collective Responsibility. Washington DC: National Research Council, Institute of Medicine, The National Academies Press; 2004, p. 541–64.
- 4Paying the Tab: The Costs and Benefits of Alcohol Control. Princeton: Princeton University Press; 2007.