Skip Page Header

Home > EU considers economic impact of alcohol policies.

Mongan, Deirdre (2006) EU considers economic impact of alcohol policies. Drugnet Ireland, Issue 20, Winter 2006, pp. 9-10.

PDF (Drugnet Ireland, issue 20) - Published Version

The European Commission has issued a Communication1 outlining a comprehensive strategy to support member states in combating the harmful effects of alcohol use in the European Union (EU), especially among young people.  In preparing the Communication, the Commission asked RAND Europe to conduct an assessment of the economic impacts of EU alcohol policies.  The resulting document, An ex ante assessment of the economic impacts of EU alcohol policies,2 was published in August 2006. The main objectives of this report were:

  • to assess the current macroeconomic impacts of alcohol use and the likely future macroeconomic impacts of the policy; and
  • to assess the current economic contribution of the alcohol industry and the likely impacts of the proposed policy on the industry.

 Alcohol consumption is associated with many harmful health, social and economic consequences throughout the EU.  Fifteen per cent of Europeans (58 million adults) consume harmful or hazardous levels of alcohol.  Alcohol is responsible for 11% of premature death and disability among males and is now the third leading risk factor for the EU disease burden, after tobacco and obesity.  Drunkenness and binge drinking among young people are becoming more widespread.  Among 15–16-year-olds, binge drinking occurs frequently and 25% of all alcohol-attributable deaths in the EU occur in the 15–29-year age group.  It is estimated that the tangible cost of alcohol-related harm in the EU in 2003 was €125 billion, accounted for by health care costs, crime, traffic accidents, lost productivity and premature mortality.  This figure does not include intangible costs, which incorporate the value people place on pain, suffering and loss of life that occur due to the criminal, social and health harms caused by alcohol.  These costs are estimated to be in excess of €270 billion. 

Although the cost of alcohol to European society is substantial, the economic role of the industry in many European countries is considerable.  Alcohol accounts for 13.9% of total expenditure on foodstuffs and 1.6% of overall consumer expenditure.  It is estimated that alcohol contributes approximately €45 billion and 1.2 million jobs (not including those in the catering industry) to the economy of the EU. In Ireland, alcohol comprises 1.3% of the total value of exports and generated a positive trade balance of €513 million in 2004.

It is recognised that the effectiveness of harm-reduction policy depends on the prevalence of harmful alcohol use.  In populations with a high prevalence of heavy drinking, taxation is the most cost-effective approach, whereas targeted strategies, such as brief interventions at primary care level, random breath testing, or advertising bans, are most cost-effective in populations with a low prevalence.  Increases in excise duties are associated with only modest decreases in overall alcohol consumption but there is evidence to suggest that they are very effective in the case of heavy drinkers and young drinkers.

The report outlined four options for future alcohol policy identified by the Commission (p. xiv):

1.    No change: Policy decisions and initiatives will be left largely to Member States and stakeholders, while the EU continues to finance projects and networks, support research, facilitate exchange of best practice, and collect and disseminate information on alcohol consumption and harm, but does not coordinate activities across policy domains. 

2.    Coordination of activities at EU level: this is similar to option 1, but the EU would encourage stakeholders throughout the EU region to undertake similar activities (e.g. self-regulation, common codes of conduct on commercial communication, exchange of best practice on interventions) and to hold Member States to their Treaty obligations. 

3.    A comprehensive strategy: Application of a wide variety of policy instruments (legislation, self­­-regulation, information and education campaigns, exchange of best practice, stakeholder involvement) across all relevant policy domains (internal market, taxation, transport, education, research and consumer policy).  The strategy would focus on drink-driving, co-ordinated campaigns, protection of third parties, commercial communication, consumer information and availability and prices. 

4.    Purely regulatory: Focus on the use of the policy instrument of regulation to achieve a decline in the harmful effects of alcohol use.

Following evaluation of each option, the authors suggested that options one and two would not result in a decline in the harmful effects of alcohol use.  They found that option three was potentially the most efficient and effective approach as it combined policies intended to lower alcohol use with activities targeting the behavioural foundations of harmful drinking.  Option four would lower alcohol use through stricter regulation and enforcement, and presented a number of advantages with respect to drink-driving, health care and public revenues.  This option was the one most likely to harm the alcohol industry and its supplying industries.  Its main disadvantage was that, without a supporting information and education campaign, changes in use might not become engrained in consumer behaviour.

The main conclusion of this report was that a European alcohol policy based on option three represented the preferred choice.  By combining a wide variety of policy instruments, this option targeted the behavioural foundations of harmful drinking as well as lowering alcohol use by reinforcing cost-effective regulation and enforcement measures.   

­1. Directorate-General Health and Consumer Protection (2006) An EU strategy to support member states in reducing alcohol related harm. COM/2006/0625 final. Brussels: Commission of the European Communities.

2. Horlings E and Scoggins A (2006) An ex ante assessment of the economic impacts of EU alcohol policies. A technical report for the European Commission. Cambridge, UK: RAND Europe.

Item Type
Publication Type
International, Open Access, Article
Drug Type
Intervention Type
Issue Title
Issue 20, Winter 2006
October 2006
Page Range
pp. 9-10
Health Research Board
Issue 20, Winter 2006
Accession Number
HRB (Available)

Repository Staff Only: item control page