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The Experience Brands Weekly #176

Minimum Unit Pricing: What happens next?

This May, Minimum Unit Pricing (MUP) is coming to Scotland. After the Supreme Court settled the legal battle between the Scottish government and the Scotch Whisky Association, the new 50p MUP will come into effect from next month. Research done by the Institute of Fiscal Studies found that across Britain roughly 70% of shop-bought alcohol is priced below 50p a unit, meaning Scottish shoppers need to be braced for some big price rises. Some cider will rise by nearly 90%, on average there will be an increase of 35% with lager and cider the most affected. This will obviously have a significant impact on the drinks industry, though most predict that the hit to revenue caused by the expected fall in consumption will be more than outweighed by the rise in prices. So what effects is this change going to have? These are our top 3 predictions.

1. Changing drinking behaviour

Minimum Unit Pricing will have an impact on the way we drink. If modelling is correct, it will have a significant impact on the number of alcohol related death in Scotland and reduce hospital admissions as the price rises reduce the amount of alcohol people can afford. Apart from this, it may also change our drinking prices. When all the prices rise, will we drink less, but when we do be willing to spend a bit more? With private label offerings brought up to similar prices as brand, Neil Boyd from Ian Macleod Distilleries predicts that most people will go for the brand. MUP also reduces the price difference between buying at the supermarket and prices at the local – it could deliver a boost to the on-trade across Scotland.

2. Supermarkets will benefit

It isn’t clear who will benefit from the increased price rises, but it seems likely to be the big supermarkets. While producers may see a short-term boost, when offered better shelf space in return for sharing some of the benefits with the big retailers, it is likely that someone will cave. Once this happens, everyone will follow in fear of loosing market share. Furthermore, it will be easier to negotiate UK-wide deals than worry about Scotland, which is only 15% of the UK spirits market.

3. Cross-border booze runs

When you can buy drink at almost half the price across the border, isn’t it worth a bit of a road trip? Or perhaps an online delivery – are the government going to check all the deliveries coming from south of the border? Scotland is not closed off from the rest of the UK, so it may just be that we see bigger bulk purchasing as people make a quick trip south of the border.

Until the Minimum Unit Pricing comes into effect, we won’t know it’s full implications. Is it the most effective way to deal with alcohol issues? Maybe not, but it may well change how people buy, where and when.

 

Other bites:

Ecover: Rubbish Café

Want to make your rubbish work a bit harder? Now you can pay for your lunch with it. Ecover are bringing a Rubbish Café to London where you can only pay with recyclable items. Dine on a zero-waste menu designed by eco-chef Tom Hunt and experience a venue inspired by upcycling expert and presenter Max McMurdo. The café will be littered with inspiration and ideas for simple swaps we can all make to reduce our plastic usage.

 

Sainsbury’s

Sainsbury’s is trialing the UK’s first electric cargo bike grocery delivery service, aiming to improve the time and efficiency of urban grocery delivery.

 

 

Diageo

Diageo is investing £150million in new visitor experiences for its whisky brands. There will be a new Johnnie Walker experience in Edinburgh, linked to four distilleries – Glenkinchie, Cardhu, Caol Ila and Clynelish to represent the four corners of Scotland. They are also investing in their other distilleries.