Minimum Unit Pricing has modest impact on the alcohol industry in Scotland

The introduction of minimum pricing for alcohol has had a modest economic impact on the drinks industry in Scotland, a report has found.

The report, commissioned by NHS Health Scotland is part of a wide-ranging evaluation of the Alcohol (Minimum Pricing) (Scotland) Act 2012 which established Minimum Unit Pricing (MUP).

In an initial assessment of the economic effects of MUP, researchers at Frontier Economics evaluated its economic impact on producers and alcohol retailers in the nine months following the introduction of the policy in May 2018.

The researchers conducted case studies with a range of businesses in Scotland and reviewed observation evidence on the industry’s performance.

The initial report, found that the short-term effects of the policy have been modest. Those interviewed reported that overall, MUP has led to a decrease in the volume of alcohol sold, but that this was largely offset by increased prices. The effects of MUP on producer revenues and profits were also small, with wholesale prices unaffected by MUP.

In addition, no retailer or producer reported closing stores or production facilities, reducing staff numbers or reducing investment as a result of MUP. 

The researchers also interviewed retailers on both sides of the Scotland-England border to see if MUP had led to an increase in people from Scotland buying alcohol from stores in England. However, they did not find evidence that MUP had a significant impact on the profitability of Scottish retailers located near the border

Andrew Leicester, manager at Frontier Economics, said: "The respondents interviewed in this study suggested that demand changed in a number of ways in the first nine months following MUP coming into force, with sales of products that were previously retailing below the minimum unit price decreasing the most. 

"Demand for smaller sizes, low-alcohol products or premium products less affected by price increases, has seen some producers and retailers adapt their strategy and product offering in response to MUP."

Neil Craig, head of evaluation at NHS Health Scotland, said: "NHS Health Scotland are leading a robust and comprehensive evaluation of Minimum Unit Pricing, which will provide a full understanding of what difference the legislation is making and to whom. 

"That of course includes the impact MUP could make to levels of alcohol-related health and social harm, but also requires us to assess the effect on the alcoholic drinks industry in Scotland."

Alison Douglas, chief executive of Alcohol Focus Scotland said: "It's encouraging to see further evidence that MUP has resulted in less alcohol being sold in Scotland and that this has been achieved without any negative impact on the alcohol industry. 

"Even a small reduction in the amount of alcohol consumed in Scotland will bring big benefits for people's health."

The next findings from the MUP evaluation are to be published by early 2020 and include the effect of the policy on children and young people.

REHIS is a registered charity in Scotland, SC009406

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