On Minimum Alcohol Pricing
Friday, March 23rd, 2012 03:19 pm![[personal profile]](http://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
miss_s_b
This was posted as a comment on somebody else's blog, but I figured it deserved a broader airing, since it's me explaining (again) how the government's actions are not neutral on pubs even when they try to appear so:
Prices for everything will go up if there's a minimum price, not because of some nefarious plot by big business (or even the Tories), but because of simple economics. If a bottle of White Lightning costs #5, no self-respecting wine manufacturer is going to want their bottle of wine to cost less; all alcohol will rise in price because market position is more important than anything else, so the lowest priced product going up will have a knock on effect right up the chain.
Meanwhile, prices in our pub will go up because we get most of our spirits from Sainsburys - because they are cheaper than any of the industry suppliers who are used to supplying people who are tied to them - so when Sainsbury's put their prices up, ours will have to rise too. This is not pubs whining, this is a simple fact.
Prices for everything will go up if there's a minimum price, not because of some nefarious plot by big business (or even the Tories), but because of simple economics. If a bottle of White Lightning costs #5, no self-respecting wine manufacturer is going to want their bottle of wine to cost less; all alcohol will rise in price because market position is more important than anything else, so the lowest priced product going up will have a knock on effect right up the chain.
Meanwhile, prices in our pub will go up because we get most of our spirits from Sainsburys - because they are cheaper than any of the industry suppliers who are used to supplying people who are tied to them - so when Sainsbury's put their prices up, ours will have to rise too. This is not pubs whining, this is a simple fact.
White Lightning
Date: Friday, March 23rd, 2012 03:48 pm (UTC)In the alcohol market there's a clear link between quality and price - the nicer stuff costs more. If you create a minimum price, to a large extent you create a minimum quality too.
White cider exists to tax-efficiently supply a maximum quantity of alcohol to people on low budgets, taste be damned. A minimum price would make white cider compete with better tasting drinks, so would cease to exist.
I expect there to be numerous products selling at minimum price which compete on quality - the only caveat to this is the extent that supermarket bullying forces quality down. The higher end marketplace won't really change.
@DuncanStott
Re: White Lightning
Date: Friday, March 23rd, 2012 04:48 pm (UTC)Why would the manufacturers of white cider stop making it when they can make more profit on it just by putting the price of all their other products up?
Re: White Lightning
Date: Friday, March 23rd, 2012 04:58 pm (UTC)People who drink indiscriminately whatever is available at the cheapest price will not suddenly become discerning drinkers.
Re: White Lightning
Date: Friday, March 23rd, 2012 05:26 pm (UTC)If White Lightning were to cease to exist you would expect this to have already happened to various cheap strong lagers like Special Brew, it hasn't.
Immediately White Lightning goes up to the same price point as something actually worth drinking, that drink will go up in price as it cannot be seen to be the same price as cheap crap, differentials matter in all things. There's been research and studies on this sort of thing, loads out there in the economics press.
The idea that cheap crap will cease to be made if it's forced up in price is a nice notion, but it's not going to happen, business in general simply doesn't work that way. All that happens is that Tesco and the manufacturer make more money from the product.