News story 10th Feb 2014

Price boost tough for drinkers to swallow

Amid concern about rising rates of alcohol-related violence and the increased health costs brought by excess consumption, new research shows that introducing a minimum price for drinks would be an effective way to reduce harmful drinking levels.

Alcohol consumption is one of the top three risk factors for the global disease burden, coming in just behind smoking and high blood pressure. The harm from alcohol represents a huge financial cost for the community.

Researchers from Monash University considered whether a minimum unit price (MUP) or a uniform volumetric tax would be more effective in reducing heavy consumption of alcoholic drinks, without unfairly penalising moderate drinkers.

The MUP would set a price for a specified volume of pure alcohol or alcoholic beverage below which products could not be sold, while volumetric taxation would be calculated on the amount of pure alcohol in a drink.

The researchers found that a MUP of $1 per standard drink would have a greater effect on reducing the amount of alcohol purchased by the heaviest consumers of wine and beer. The minimum price would substantially raise the cost of cask and fortified wine, preferred by heavy drinkers. A uniform volumetric tax would likewise increase the cost of beer and wine, but might also lower the prices for spirits and flavored cider, making them more popular.

Lead researcher Dr Anurag Sharma from the Centre for Health Economics said cheap wine played a conspicuous role in the heavy consumption of alcohol, and the MUP could be effective in significantly changing consumption behaviour.

Basically the more they drink, the more it will cost them

Dr Anurag Sharma

Centre for Health Economics

"Increasing the cost of alcohol to consumers, through government pricing and taxation policies, has been shown to be effective at reducing overall consumption in the population, along with rates of heavy drinking and the incidence of alcohol-related harm," Dr Sharma said.

"The MUP's appeal from a public health perspective is that it increases the price of the cheapest alcohol products."

"There would only be a very small increase in the cost for the light and moderate consumers but a minimum price results in significant increases in the cost for the heaviest consumers, and in turn has the potential to significantly reduce their consumption – basically the more they drink, the more it will cost them."

The researchers acknowledge that for the greatest effect on drinking patterns, any form of pricing control would need to be complemented by other strategies, including the controls on the supply of alcohol, enforcement of liquor laws, restrictions on advertising and public education programs.

The research was funded by the Australian Research Council and data was provided by VicHealth.
  • anurag-sharma-pr

    Dr Anurag Sharma

    Senior Research Fellow, Centre for Health Economics Monash Business School

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