The high price of cheap alcohol

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By Pamela S. Erickson, President/CEO of Public Action Management, PLC
OJJDP’s 13th National EUDL Leadership Conference
Orlando, Florida
August 10, 2011


Strategies that reduce
cheap alcohol, curtail
promotional practices, and
limit availability (location,
hours, products) are very
effective.
Adding such strategies will
complement enforcement
efforts and provide a more
comprehensive prevention
program.
CADCA reported in
February 2010: “…only 17%
of coalitions report being
involved in limiting or
restricting location and
density of alcohol outlets.”
 67% did compliance checks
and 64% helped enforce
laws.

Objectives:



Learn about effectiveness of
increasing price and limiting
availability of alcohol.
Learn how to raise awareness
about cheap alcohol products
in your community.
Learn how to work with state
and local regulations to limit
cheap alcohol products.
Very competitive grocery markets
bring us lower prices.
 Since the recession began, people
expect and value low prices.
 But, alcohol is different:
 Highly competitive, “free
markets,” bring more outlets and
heavy promotion.
 Lower prices increase
consumption.
 Lower prices often require high
volume purchase.
 Continued low prices will
eventually lead to serious social
problems.

Alexander C. Wagenaar, PhD,
professor of health outcomes and
policy at University of Florida College
of Medicine.
“Our meta-analysis cumulated
information from all the published
scientific research on this topic over
the past half century, and results
clearly show increasing the

price of alcohol will result in
significant reductions in
many of the undesirable
outcomes associated with
drinking."


Tilt is 12% alcohol or about 5
drinks; $1.99 or $.40 per drink.
Big Flats is $2.50 for 6 pack or
$/42 per beer.
THIS LOOKS LIKE A LIQUOR
STORE/WINE BAR
BUT…IT’S A BIG BOX
GROCERY STORE

Walgreen’s decides to sell
alcohol in its nationwide-chain.
In Indiana, 183 applications filed
and 168 approved as of Jan.
2011, according to ProjectRAD.

CDC Task Force recommends
policies that limit outlet density
based on research showing that
increased outlets is associated
with “excessive alcohol
consumption and related
harms.” thecommunityguide.org

The United Kingdom was once a
model of regulatory success.

Today it is deregulated with all
forms of alcohol available in
bars, clubs and grocery stores 24
hours a day, 7 days a week.

They have high taxes, little
regulation, poor enforcement
and lots of cheap alcohol.

They also have an alcohol
epidemic.

Source: Statistical handbook 2007 (British
Beer and Pub Association

Hospital Admissions have doubled for liver
disease and acute intoxication.

Drinking and intoxication of youth 15-16 are
at very high rates, according to the European
School Survey.
100
90
80
70
60
50
UK
40
US
30
20
10
0
Use in past 12
months
Use in past 30
days
Drunk in past 12
months
Drunk in past 30
days




Finland cut tax on alcohol by 30% and loosened
regulations. Alcohol became the leading cause of death
for men. Regulations were then strengthened and taxes
increased.
In Russia, alcohol is a primary cause for drastically
reduced life expectancy for men (currently 63 v 74 for
Russian women). Recently, they introduced minimum
prices in addition to taxes and other measures.
New Zealand loosened regulations in 1989 and are now
considering stronger measures in the face of problems.
Brazil has few business regulations and high rates of
homicide, liver cirrhosis and traffic fatalities involving
alcohol.
Markets evolve toward domination
of a few, large corporations (e.g.
Intel, Home Depot).
 Competition becomes fierce with
price wars, loss leaders, discounts
for volume consumption. Smaller
operators are undercut and many
go out of business.
 National or foreign corporations are
rarely constrained by community
norms;
 Regulations can be hard to defend
against large corporations with
major legal and lobbying resources.




Net profit for food retailers is less
than two pennies on each dollar of
food sales.
How can supermarkets
survive?
“To earn a dollar,
supermarkets would
rather sell a $1 item 100
times, making a penny on
each sale, than 10 times
with a dime markup.”
Source: Food Marketing Institute



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
Large chain with many
“big box” stores
Warehouses
Distribution system
Ability to buy directly from
manufacturer
Ability to buy at discount,
sell high volume at
discount, freely advertise,
and offer promotional
incentives.
UNITED STATES TREND
UNITED KINGDOM TREND




Four large supermarket
corporations have 75% market
share.
Price of alcohol is 70% more
affordable.
Cheap prices drove increase in
drinking at home/pre-loading.
Regulation reduced over a 40
year period to a point where
there are few restrictions.





Top 10 supermarket chains have
68% of revenue.
US alcohol prices also reduced.
Sale prices can reduce price to
less than $.25-50 per drink.
US recession and supermarket
prices drive drinking and
entertaining at home.
Increase in off-premise outlets.
Reduction in regulation; increase
in hours and days of sale.





Availability. Allows alcohol to be sold by the bottle and the
drink, but limits the number, location, types of alcohol
products, and hours of outlets.
No “Bargain Booze”. Regulations balance prices, control price
competition, and restrict dangerous marketing and promotional
practices.
Children and Teens. Age restrictions protect young people from
the serious problems of underage drinking.
Drunk driving. Creates and enforces strict measures against
drinking and driving—sobriety checks, blood alcohol
limits, driver’s license suspension.
Education and Enforcement. Uses the carrot of education
(alcohol awareness programs, “schools” for offenders) and the
stick of enforcement (fines, community service and jail) when
education fails.
 Source: Adapted from World Health Organization recommendations.
WE’VE FORGOTTEN WHY WE
HAVE ALCOHOL REGULATION
“FREE MARKET” ADVOCATES
CRY FOR DEREGULATION
THREATS
Lawsuits--Retailers and
manufacturers challenge
marketplace regulations. Since
2005, over half the states have been
sued in federal court.
 Legislation--Retailers challenge
retail regulations. (Proposals to sell
more forms of alcohol in more
locations and extension of hours and
days of sale are common.)
 Ballot measures--Large
corporations finance ballot measure
signature gathering and campaigns.
 Budget reductions--prevent regular
enforcement.

ACTIONS
Identify Problems with Cheap
Alcohol in Your Community
Document the high price of
underage drinking and other
alcohol problems.
Build Community Awareness
about Problems and Educate
policy makers about the
effectiveness of regulation.
Work with local and state
regulatory systems to make
needed changes.



Survey the alcohol retail
environment in your
community. Take photos
of cheap products and
those attractive to youth.
Check prices in grocery
circulars to find cheapest
price.
Note examples of
inducements to buy in
volume.





Jeremiah Weed Spiked Cola
Jeremiah Weed Tea
Hard Cider
Smirnoff Mixed Drinks
(blueberry lemonade and
cranberry and lime)
New flavors/sizes for beer



Purpose is to get an idea of
prices for typical alcohol
products that are readily
available. Purpose is not a
scientific survey.
Method is to review weekly
newspaper ad circulars for major
grocery and/or liquor store
chains that feature price
reductions to increase sales.
Track products that kids are
likely to drink: beer (not microbrews) 19%, liquor 44% ,
alcopops 17% and wine/wine
coolers (7%), according to a
study by Michael Siegel et al.

40 shots of vodka ($.25
per drink) or 18 Light
Beers ($.55 per drink)

What is a drink size?



Beer: 12 oz= 1 drink (@ 5% alcohol)
Wine: 750 ml= 5 drinks (@ 12% alcohol )
Spirits: 750 ml= 17 drinks (@40% alcohol or 80 proof)

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Calculations:

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30 pack of beer @ 15.99 plus 8% tax=$17.27/30 or $.58.
Low end vodka @ 9.99 plus 8% tax=$10.79/17 or $.64
Two-buck Chuck @ 2.00 plus 8 % tax=$2.16/5 or $.43
Large jug wine @ 9.99 plus 8% tax=$10.79/20 or $.53 (large bottle is 3 liters which contains 20
drinks)
Example: Week of July 5-11, Phoenix Metro area
Store 1 (Albertsons):
Cheapest Beer: $.67 for 18 pack
Cheapest Wine: $.51 for 6 bottles of 1.5L wine’ $.57 for 3
Cheapest Spirit: $.23 for 1.75L vodka for 6 or $.26 for one
Store 2 (Safeway):
Cheapest Beer: $.78 for 18 pack
Cheapest Wine: $1.80 for 6 bottles
Cheapest Spirits: $.46 for 1.75 L; $.42 for 6 bottles
Store 3 (Bashas):
Cheapest Beer: $.56 for 30 pack
Prepare brief, easy-tounderstand report
 Ask to speak to city
council, service clubs
 Issue press release
 Seek support of allies:
MADD, public health
groups, law
enforcement, local
small business

POLICY




Ban dangerous products such as
alcohol caffeinated energy
drinks.
Sell alcopops and high alcohol
content products in liquor stores.
Enact comprehensive price
policies: wholesale uniform
prices, volume discount bans,
ban on retail sale below cost,
limit high volume drink specials,
reasonable taxes.
Limit outlets and days/hours of
sale
RESOURCE




Alcohol Justice (formerly Marin
Institute) reports and model
legislation
Montana alcohol definitions
Healthyalcoholmarket.com
newsletter, June 2011 Issue
“When is a beer a beer? Alcohol
definitions are critical deregulation issues.”
CDC Community Guides




Each year alcohol claims 79,000
lives.
Alcohol is related to crime and other
social problems.
While underage drinking has
dropped to the lowest level in years,
27% of 12 graders reported being
drunk in the past 30 days. Alcohol
abuse robs our youth’s potential.
A balanced alcohol marketplace
protects the public by keeping
prices reasonable, outlets and
availability limited and prevents
aggressive sales practices.

Problems with alcohol touch
many Americans. When
asked in a Gallup poll, “Has
drinking ever been a cause of
trouble in your family?” 31%
said yes.


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
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
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“2011 Issue Briefs for States, Brief Explanations of Common Regulatory Issues Facing State and Local
Communities, www.healthyalcoholmarket.com
“Alcoholic beverage preferences and associated drinking patterns
and risk behaviors among high school youth,” Siegel MD, et al.. Am J Prev Med 40(4), 2011.
”Alcohol Outlet Density and Public Health” and other materials, Alcohol Justice (formerly The Marin
Institute): www.alcoholjustice.org
“Alcohol Policy Research & Alcoholic Beverage Control Systems: An Annotated Bibliography & Review,”
NABCA, National Alcohol Beverage Control Association, 2008
“Competition and Profit,” Food Marketing Institute Website (PDF about grocery business today)
www.fmi.org
“Effects of alcohol tax and price policies on morbidity and mortality: a systematic review,” Wagenaar, A,
et al, American Journal of Public Health 2010.
“Preventing Excessive Alcohol Consumption,” Guide to Community Preventive Services,
www.thecommunityguide.org
“The Dangers of Alcohol Deregulation: The United Kingdom Experience,” Pamela S. Erickson,
www.healthyalcoholmarket.com
“The High Price of Cheap Alcohol,” Pamela S. Erickson, www.healthyalcoholmarket.com
Toward Liquor Control, Raymond B. Fosdick and Albert L. Scott, Center for Alcohol Policy,
www.centerforalcoholpolicy.org
“What are the most effective and cost- effective interventions in alcohol control?” World Health
Organization, February 2004
 www.healthyalcoholmarket.com for Healthy Alcohol
Marketplace newsletter and resource material
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