Should there be a "floor price" on retail alcohol sales?

In amongst all of the discussions of whether there are health benefits of moderate wine consumption, it has been universally accepted that there is such a thing as excessive alcohol consumption, and that this is unhealthy. There is no universal definition of "excess" in this case, but clearly it involves such things as addiction to alcohol, and consuming alcohol under circumstances that are likely to lead to serious problems, such as when you are pregnant.

Most societies have long been concerned about this, not least because alcohol is often related to both domestic crimes as well as seriously anti-social public behavior. However, what to do about it is another matter entirely. How does a society as a whole restrict unhealthy alcohol consumption while still maintaining at least a semblance of societal freedom?

Here, I look at the possibilities that have been tried, before outlining the recent one of having a minimum (floor) price for alcohol beverages.

The past

Health warnings have long been mandatory for tobacco products, and they are becoming more common for alcohol, as well. For example, warning labels advising pregnant women about the dangers of drinking alcohol are soon to become mandatory in New Zealand and Australia (Alcohol to have mandatory warning labels after move backed by transtasman health ministers). Ireland is set to introduce even more serious warnings (Cancer warnings on labels: the latest battle in alcohol regulation), and California has recently introduced the similar "Proposition 65". However, there has also been strong resistance to this idea elsewhere within the wine industry (New health warnings on wine bottles could 'damage the soul' of France, winemakers say). Mind you, the medical professional has a justifiably jaundiced view of the alcohol industry (Is the alcohol industry doing well by ‘doing good’?).

The setting of a minimum age for drinking and/or purchasing alcohol is common in most countries, but this is usually hidden amongst a whole series of other restrictions on the young, including driving, voting and having sex. There is, of course, no universally accepted legal minimum age for any of these activities.

Another obvious approach has been to restrict activities when people are affected by alcohol. To this end, for example, most places in the world have a maximum permitted blood alcohol level for driving a motorized conveyance. This level varies widely from country to country (see Wikipedia).

Some decades ago, the USA and Canada tried one possible extreme action, which was attempting to ban retail alcohol sales completely, which they called Prohibition. This turned out badly. In fact, the major effect was to proliferate and entrench Organized Crime syndicates, the effects of which are still being felt even today. The publication of photos of Hollywood celebrities openly drinking in speakeasies was simply one of the most obvious indications that the public at large was not all that impressed by Prohibition. Only a few other countries have gone down this same route (see Wikipedia).

Some of the Nordic countries tried almost the opposite tack, including Finland, Iceland, Norway and Sweden. This was to have the government take control of alcohol distribution. This did not mean that the government tried to restrict alcohol availability or consumption in any general way, although this is often claimed in the foreign media even to this day. Instead, rigorous requirements could be implemented to restrict alcohol availability to minors and to inebriated people. Furthermore, education programs could be initiated to dissuade people from drinking spirits until they became blind drunk, which had been the traditional approach to alcohol. Instead, the idea was to persuade people to switch to beer and wine.

Quite a few locales have tried this tactic elsewhere in the world (listed in Wikipedia), including some states of the USA as well as Canadian provinces. According to the National Alcohol Beverage Control Association, 17 US states (shown in the map above) control the sale of distilled spirits and, in some cases, wine and beer through government agencies at the wholesale level; 13 of those jurisdictions also exercise control over retail sales for off-premises consumption. Perhaps not the least incentive of this approach for governments has been the potential tax windfall.

The present

Recently, Australia has tried yet another approach to the issue, which is to introduce a so-called floor price for alcohol, which sets a minimum allowable sales price for alcoholic beverages. The idea is to eliminate the availability of really cheap alcohol, so that getting drunk becomes an expensive activity, thus providing a deterrent.

Discussion of the topic in Australia dates back to June 2012, when the Australian National Preventive Health Agency (ANPHA) published a formal Issues Paper - Exploring the Public Interest Case for a Minimum (Floor) Price for Alcohol (A government inquiry has been told wine is cheaper than bottled water). It pointed out research showing that price and availability are two of the main drivers of problem drinking, such as binge drinking and under-age drinking, and investigated a model for a floor price on alcohol. Public comments were called on the Issues Paper, prior to recommendations being delivered to the federal government the next year.

Among the responses, public health experts called for a crackdown on websites that promote ”ridiculously cheap” alcohol (Cheap wines provoke health fury), and The Winemakers’ Federation of Australia (WFA) claimed that “There is no clear consensus in the relevant research that a minimum price would reduce harm” from alcohol abuse (Aussie winemakers dispute data behind minimum alcohol pricing). An alternative proposal, from the Distilled Spirits Industry Council, called for all alcoholic beverages to be taxed according to alcohol content, instead (Cheap wine could get more expensive, spirits cheaper, under proposal for alcohol tax overhaul).

Interestingly, it was the latter proposal that the ANPHA ultimately recommended, apparently finding little support for the idea of a minimum price on alcohol (Australian National Preventive Health Agency calls for volumetric tax on cask wine). So, there was a reform of the so-called “wine equalization tax” and the implementation of volumetric taxation, in order to reduce the availability of cheap wine, in particular. Both winemakers and distillers were happy not to have a floor price on packaged liquor, but the distillers were happier than the winemakers with the concept of volumetric taxation. (Note: Scotland recently introduced a minimum price based on alcohol content.)

However, one of places with the strongest call for a floor price has been the Northern Territory (NT), a federally managed Australian territory occupying the north-central part of the country — it is the bit containing Kakadu National Park, and the Uluru - Kata Tjuta National Park (aka Ayers Rock), which are the only Australian things most foreigners recognize aside from the Sydney Opera House. Drinking for the sake of getting drunk has long been recognized as a major social problem in the NT (Wine cask haul fuels call for grog law changes).

So, earlier this year, it happened, anyway. In August, the Foundation for Alcohol Research and Education recommended that the NT Government introduce a minimum price level of AU$1.50 per standard drink, to reduce consumption levels and related harm. That recommendation was adopted as NT law as from the beginning of October, although AU$1.30 was the price chosen (Northern Territory brings in $1.30 per standard drink floor price on alcohol). This effectively bans the cheap AU$4-5 (= US$3) bottles of wine favored by alcoholics (and possibly other people), because the minimum price of a bottle of wine in the NT is now AU$9.

The WFA has noted that this action may breach the Australian Constitution (Alcohol floor price may breach Australian Constitution), but it will support the NT Government because of its “special problems” around alcohol: “We are supporting the NT government in developing good methodology to assess its effectiveness. We would hate to see other states bringing in a measure that is not only illegal but doesn’t work.”

That last comment is a reaction to the fact that the Western Australian state government announced back in 2017 that it has been considering the same option (WA Government mulls minimum price on takeaway alcohol), and it has renewed this intention since the NT action (State government continue to mull over minimum alcohol price). A recent community survey indicates that they may have the voters' support in doing this (Majority of WA adults support introduction of minimum price on alcohol).

Conclusion

Alcohol continues to be a legislative problem throughout the world. No one solution has apparently yet been proposed to the issue of balance between social activities and social problems. You'd think that health-damaging activities would obviously be avoided by human beings, that this is clearly not so. What should societies, who as a whole bear the brunt of the problems, do?