Minimum price to hit poorest

09 December, 2011

Plans for minimum unit pricing in Scotland will hit poorest households the hardest, a report from the Institute for Fiscal Studies has claimed.

The report said that if there was no behavourial change as a result of a 45p- per-unit minimum price being introduced, the cost would amount to 2% of the poorest households’ budgets, against 1.3% for the richest.

“Advocates of minimum pricing tend to argue that it would more precisely target problem drinkers and would have relatively little effect on moderate consumers,” said the report. “Our figures suggest that at 45p a minimum price would directly affect the vast majority of off-licence alcohol consumers.” 

The IFS said 71% of all units of alcohol sold in the off-trade were currently below the 45p-per-unit minimum price that Scotland is expected to opt for. Some 87% of cider and 81% of lager units retailed for less than this amount
in 2010.

The relatively high retail price of RTDs means they would be largely unaffected. Just 2% of RTDs sell for less than 45p per unit. 

Kantar Worldpanel figures in the report showed that Aldi sold 92.3% of its alcohol unit sales below the 45p price cut-off in 2010, followed by Lidl on 85.8% and Netto on 85.7%. Off-licences scored 68.3% – less than Asda, Morrison and Tesco, but more than Sainsbury’s, the Co-op and Waitrose, which was on just 32.2%.

In contrast to Scotland’s proposals, UK government plans to ban sales of alcohol at less than the cost of duty and VAT would hit only around 1% of the total amount of alcohol sold in take-home, according to the report.

The IFS said the measure would have “virtually no impact” on cider or RTDs.

The report added that discount supermarkets and local off-licences would be most affected by the ban, while poorer households would be harder hit than the well-off.

It reported that calculations based on Kantar Worldpanel data for 2010 showed that 4.1% of off-licence sales were at less than the current proposed definition of below-cost, with 3.2% for Netto and 2.3% for Lidl. This compared with just 0.1% for Marks & Spencer, 0.2% for Waitrose and 0.4% for Tesco.

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