In May 2018 Scotland became the first country in the world to introduce minimum unit pricing for alcohol at a rate of 50p per unit. The scheme aimed to save lives, reduce hospital admissions, and improve the overall health of the population.

The Scottish government has now voted to increase the rate to 65p a unit from September 30.

Shopper behaviour will change as a result. According to an NIQ survey conducted six months after initial implementation of minimum unit pricing, 17% of shoppers were buying drinks with a lower ABV content.

Assuming this behaviour carries over to 2024, this is good news for brands who recently reduced their alcohol contents in response to duty changes.

In the 2018 survey, 18% of shoppers reported that they took advantage of lower prices in England than in Scotland. We can now expect this trend to carry on, and possibly magnify.

Minimum unit pricing is unlikely to deliver health benefits if shoppers can circumvent the legislation in this way.

Cross-border shopping won’t be an option for everyone in Scotland, and the minimum unit price increase is expected to have a significant impact on the shopping habits of Scots.

Prices will increase on approximately two-thirds of current spirits, cider and beer volumes. There will be a negative impact on the volume purchased, but the higher prices should deliver value sales growth of 6.6% for beer (an extra £65.2 million), 6.8% for spirits (+£22.4 million) and 1.9% for wine (+£5.5 million).

This might not look like bad news for the industry, but increasing the minimum unit price will cause significant disruption.

In spirits, increasing the price of lower-end spirits to meet minimum price thresholds will naturally close the gap to the upper end of the market.

Manufacturers and retailers should consider whether increases should be made towards the top end to maintain a price ladder, taking into consideration variables such as price elasticity to come up with the best response.

Another question mark will be whether private-label remains a viable alternative to brands, without a significant price advantage as a selling point.

Similarly, larger multipacks will have relatively little price advantage over smaller sizes unless retailers elect to inflate the price of smaller packs beyond any minimum requirement.

Brand owners and retailers need a considered response to ensure they adopt an optimal position on the minimum unit price change.

Using promotions wisely will help retailers and brand owners come out on top as shoppers become more price sensitive.

Wine will pose a threat to sales of other BWS categories, not least by stealing shelf space. Brand owners in rival categories need to maintain engagement with shoppers to keep them on board, or risk becoming marginalised.

Demand for large multipacks will increase in August and September as households look to stockpile before the law changes. Retailers should stock up accordingly.

Minimum unit price is creating an even bigger challenge for BWS brand owners at what is already a difficult moment. Companies who are agile and respond effectively to the changes will thrive. If manufacturers and retailers adopt a business-as-usual approach, they will lose out to more flexible competitors.