Home > Steering Group’s recommendations on minimum pricing, marketing and sponsorship.

Mongan, Deirdre (2012) Steering Group’s recommendations on minimum pricing, marketing and sponsorship. Drugnet Ireland , Issue 41, Spring 2012 , pp. 3-4.

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The steering group report on a national substance misuse strategy1 contains 45 recommendations under the pillars of supply, prevention, treatment and rehabilitation, and research. The recommendations that have generated most debate relate to the introduction of a minimum price for alcohol, restricting alcohol marketing and phasing out sponsorship of sports and other cultural events by the drinks industry. This article aims to describe the rationale behind each of these recommendations.2  

Minimum pricing
Alcohol is price sensitive – increasing the cost of alcohol reduces its consumption and decreasing the cost of alcohol increases its consumption.  Price is therefore often used as a policy lever to reduce alcohol consumption and its related health and social harms. The steering group recommends introducing ‘a legislative basis for minimum pricing per gram of alcohol’. Minimum pricing is the lowest price at which any alcohol beverage can be sold. Under such a regime, the price of a container of alcohol is set (by government) based on the number of grams of alcohol content in the beverage, so the higher the number of grams of alcohol the higher the minimum price will be. This increases the price of cheap imported alcohol, rather than of high-quality beer and wine. Recent research in British Columbia has shown that a 10% increase in the minimum price reduced consumption of all alcoholic beverages by 3.4%.2
 
Why is minimum pricing needed?
In Ireland, alcohol has become more affordable, particularly in the off-trade sector. The introduction of more liberal licensing legislation has led to alcohol being sold in more places, including supermarkets and garage forecourts, and for longer periods of time. This has increased competition between retailers, particularly mixed trading outlets (supermarkets) who can use alcohol as a loss leader and can offer deep discounts and promotions. This results in alcohol being available at very low prices. Harmful drinkers tend to buy alcohol that is cheaper than that bought by low-risk drinkers. Cheap alcohol is also attractive to young people. So, a minimum pricing policy is beneficial in that it targets the drinkers causing the most harm both to themselves and to society, while having little effect on the spending of adult moderate drinkers. When alcohol is sold below cost price the retailer is entitled to a VAT refund on the difference between the cost price and the below-cost sale price.  In effect, this means that the government is subsidising large retailers who can afford to sell alcohol at below-cost price. 
 
Will this not just lead to more profit for the alcohol industry?
Yes, but the introduction of a social responsibility levy on the alcohol industry should offset those profits. This levy will fund the state services dealing with the harms caused by alcohol, and public health counter-advertising. As part of the Master Settlement Agreement in 1998 involving 46 states in the US, the tobacco industry must provide for the cost of treating smoking-related illness, and of funding educational programs to reduce underage smoking. This settlement amounted to a total of $209 billion to be paid over a period of 25 years.3
 
Why not just raise taxes?
An increase in taxation may not be successful in curbing the sale of cheap alcohol because some retailers, particularly supermarkets who sell cheap alcohol and use it as a loss leader, can simply absorb tax increases. In addition, taxation may have a greater impact on the on-trade, where the price of alcohol is already considerably more expensive, and where operators will be more likely to pass on the tax increase to the consumer.
 
What arguments are used to oppose minimum pricing, and are these arguments valid?
Opposition to minimum pricing originates mainly from the retail and drinks industry, and is broadly along the following lines:
 
­Low-risk drinkers will have to pay a higher price for the actions of others.
Alternative view: It is the harmful drinker and not the low-risk drinker who will be most affected.  Harmful drinkers buy more alcohol than the average consumer and are proven to be price sensitive so this measure will affect their alcohol consumption.
 
­People on low incomes will be penalised.
Alternative view: Low-risk consumers, irrespective of income levels, will notice very little difference in terms of cost. What will be noticeable, though, is a reduction in alcohol-related deaths and illnesses among low earners who experience a lot of the harms associated with alcohol.
 
­Minimum pricing contravenes EU trade law. 
Alternative view: While minimum pricing for most products is illegal, the EU treaty states that introducing a minimum price for alcohol may be allowed provided that it can be demonstrated that such a measure is both necessary and proportionate to reduce alcohol-related harm. However, the treaty states that a minimum price cannot be introduced if it is set so low that imported alcoholic products are placed at a disadvantage in relation to identical domestic products, and also that the alcohol industry should not be involved in the process of setting the minimum price.
 
Marketing
The steering group recommends the development of legislation to provide for a 9.00pm watershed for alcohol advertising on television and radio, limiting alcohol advertising in cinemas, and the prohibition of all outdoor advertising of alcohol.
 
What is the link between marketing and alcohol use?
In a systematic review of 13 longitudinal studies with a total sample of over 38,000 young people, there was evidence that exposure to alcohol advertising and promotion predicted both the onset of drinking among non-drinkers and increased levels of consumption among existing drinkers.4
 
Why is it important to delay adolescents from drinking?
An adolescent need drink only half as much as an adult to experience the same negative effects, and even occasional binge drinking can damage the young brain. MRI (Magnetic Resonance Imaging) scans of the brains of 14–21-year-olds show that those who abuse alcohol have about 10% smaller hippocampi – the area of the brain that handles memory and learning and is responsible for decision-making and reasoning.5 Those who start drinking at the age of 15 are four times more likely to become dependent than those who commence drinking at the age of 21.6
 
Why are the existing Irish voluntary codes not sufficient in reducing young people’s exposure to alcohol marketing?
Voluntary codes in relation to the marketing and promotion of alcohol were agreed between the Department of Health and the advertising and alcohol industries in 2005. The codes state that their purpose is to reduce the exposure of young people to alcohol advertising and marketing and to limit the overall level of alcohol advertising and sponsorship across all media in Ireland. In spite of this stated aim, there is no mention in the codes of specific targets or timeframes. Instead, the codes simply monitor adherence to initiatives which may or may not have any impact on the exposure of children to advertising.
 
These codes are insufficient for a number of reasons:
·         They have no legislative framework.
·         They fail to provide effective cover for all forms of alcohol marketing, such as new media and sponsorship.
They do not address the increasingly common branded events which merge alcohol brands with key aspects of youth culture. A cultural or music event with an alcohol brand in the title, such as Absolut Fringe or the Jameson Dublin International Film Festival, can be advertised on radio before the watershed as this does not constitute alcohol marketing under the existing codes.
·         They fail to act as a suitable deterrent to bad marketing practices because of weak enforcement and lack of stringent penalties. If a breach is upheld there is no penalty, the drinks company or advertiser is simply asked to remove the offending promotion.
·         The reliance on public complaint is of limited effectiveness. In many instances, young people are the only ones aware of marketing and promotions, and they are unlikely to be a critical audience. For example, parents may not know what advertising is reaching their children through social networking sites like Facebook.
 
Sponsorship by alcohol companies
The steering group recommend that drinks industry sponsorship of sport and other large public events in Ireland should be phased out through legislation by 2016.
 
What is the link between sponsorship by alcohol companies and harmful use of alcohol?
Sports sponsorship by the alcohol industry provides an opportunity to build the alcohol brand into the name of the event through mention in sports commentaries, signage on clothing and sports grounds, and products retailed to fans. Marketing through sports sponsorship attracts young males, the group most likely to be heavier drinkers. It also accesses audiences when they are most receptive to learning about a product – while they are having a good time at an exciting branded event. Many sports events are also family affairs, and alcohol ‘impressions’ are also made on young people, helping form in adolescence the attitudes and preferences that are taken on into later life.
 
Research has shown that young people have a particularly high awareness of, and exposure to, sports sponsorship.7 Events are chosen to show how well the brand understands and relates to young people: in an analysis of alcohol industry documents, one Carling executive was quoted as saying: ‘They [young men] think about four things, we brew one and sponsor two of them’.8 In a New Zealand study of over 1,200 sports players, ranging from social players to provincial/national competitors, alcohol sponsorship was reported by 48%. Those who received sponsorship at the individual, team or club level were more likely to be hazardous drinkers, and had an average AUDIT score (which measures harmful drinking) that was 2.4 points higher than that of those who received no sponsorship.9
 
 
 
Item Type:Article
Issue Title:Issue 41, Spring 2012
Date:April 2012
Page Range:pp. 3-4
Publisher:Health Research Board
Volume:Issue 41, Spring 2012
EndNote:View
Accession Number:HRB (Electronic Only)
Subjects:A Drugs and alcohol use, abuse, and dependence > Prevalence of drugs and alcohol use > Problem drugs and alcohol use
VA Geographic area > Europe > Ireland
B Drugs and alcohol substances > Alcohol
A Drugs and alcohol use, abuse, and dependence > Prevalence of drugs and alcohol use > Drugs and alcohol use behaviour > Alcohol consumption
MP-MR Policy, planning, economics, work and social services > Economic policy
MP-MR Policy, planning, economics, work and social services > Economic aspects of drugs and alcohol (cost / pricing)
MP-MR Policy, planning, economics, work and social services > Financial management > Sponsorship
G Health and disease > Drugs and alcohol disorder > Alcohol use
MP-MR Policy, planning, economics, work and social services > Policy > Policy on drugs and alcohol
L Social psychology and related concepts > Economic availability or accessibility
MP-MR Policy, planning, economics, work and social services > Marketing and public relations (advertising)

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