Research indicates supermarkets 'under-shifting' cheap drink
Supermarkets subsidise tax increases on the cheapest drinks according to research by the University of Sheffield recently published in the journal Addiction. It suggests the impact of price rises on harmful drinkers - those most sensitive to price changes - have been undermined by supermarket tactics to keep customers attracted in store.
The press release says "retailers appear to respond to increases in alcohol taxes by ‘under-shifting’ their cheaper products (raising prices below the level implied by the tax increase) and ‘over-shifting’ their more expensive products (raising prices beyond the level implied by the tax increase)." According to the research, under-shifting affects a large proportion of total sales: approximately 68% of beer, 38% of spirits and 31% of cider sales.
However this year the Chancellor ended the the alcohol duty escalator, which had seen duty rise 2% above inflation since 2008 until last year. Professor Petra Meier, of the Sheffield Alcohol Research Group (SARG) said "alcohol duty increases can be part of a mix of measures" to address alcohol misuse since the "ready availability of cheap alcohol" is a "key influence" on alcohol-related harm. Sheffield have of course worked extensively on Minimum Unit Pricing which is seen as necessary to prevent 'loss leading' or 'under-shifting' against tax rises.
Professor Paul Dobson at the University of East Anglia, also involved in the research, said: “Subsidising cheap alcohol might be attractive to supermarkets in their efforts to increase the number and frequency of store visits that shoppers make" but it was "imperative that the Government take a much closer look at how taxes and duty are applied on alcohol".
Earlier this year University of Cambridge research on the impact of end of aisle displays found that for a 1% decrease in the price (per volume) of alcohol there was approximately a 5% increase in sales volume. A below cost ban is expected to be introduced in law shortly, though the impact of a below cost ban is expected to be "approximately 40 to 50 times smaller than the estimated impact of a 45p MUP".
Channel 4's Dispatches airs 'The Cost of Cheap Alcohol'
Channel 4's investigative programme Dispatches explored recent events in relation to minimum pricing and the Government's U-turn amidst accusations of industry lobbying. The show is available to watch via 4oD for another 15 days.
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