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.
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