Alcohol prices

Happy New Year for Supermarkets as Alcohol Prices Rise

When government minimum unit prices for alcoholic beverages were imposed last week, craft beer enthusiast John Duffy noticed that the cost of a four pack of German Rheinbacher pilsner at Aldi had dropped from € 4.49 to € 7.73.

uffy, co-founder and chairman of independent craft beer consumer group Beoir, believes that the Minimum Unit Price (MUP), aimed at reducing the availability of strong and cheap alcohols, will not affect most Irish craft brands because their price is generally higher than the MUP Threshold. But he’s worried this will reduce the availability of good-value foreign beers.

Although he is not in favor of legislating on “people to be healthy”, he would have preferred the government to introduce higher taxes on alcohol rather than allowing supermarket chains – which should benefit the most from the measure – to retain most of the MUP’s income.

“I think the only reason the government brought MUP to the line was because the supermarkets could keep the money rather than it was a tax,” Duffy said.

Consumers on a low budget already grappling with Celtic Tiger inflation levels eroding their purchasing power – found on Tuesday that the state had already launched Dry January with new rules that prohibited selling any alcoholic beverage at a floor price of 10 cents per gram or € 1 per standard drink.

The regulation, which is part of broader legislation aimed at stemming alcohol-related illness and death, targets products that are cheap relative to their strength.

This means that discount stores that previously sold 750ml bottles of wine for € 4.99 must now charge at least € 7.10, and a 12.5pc wine cannot be sold for less than € 7. , 40 €. A 500ml can of beer must cost at least € 1.70, which caused the plates of 24 cans of beer to more than double overnight last week.

But high-end brands will be the least affected, including Moët & Chandon champagne drunk at a Foreign Ministry celebration amid the first lockdown. However, the proceeds of price increases in the lower end of the market are not used to fund drug treatment services.

One of the most vocal critics of the MUP, which has also been introduced in Scotland and Wales, is economist and former Senator Sean Barrett, who believes it represents a big boon for supermarkets. If the government wanted to further reduce alcohol consumption – which fell by 10.4% in 2020 and the first nine months of 2021 – it should have increased excise duties on alcohol, he said. Barrett cites 2015 estimates from the Oireachtas Library and Research Service which calculated that alcohol retailers could make 78.3 million euros per year from MUP.

The lecturer from Trinity College Dublin said: “It is amazing to me that an industry receives 78.3 million euros per year for nothing. It’s almost as if a stereotypical Killiney Fine Gaeler designed it with lower orders in mind.

“This is a significant change from the excise tax. Alcohol consumption is thus presented as a problem for low-income people who do not go to high-end salons and private clubs and who cannot afford premium brands. There should be an investigation into how this legislation was passed by cabinet. “

Supermarkets have already seen sustained sales since the pandemic led more and more shoppers to stay at home for long periods of time. While grocery market sales declined 6.4% in the 12 weeks to November 28 from 2020, when non-essential stores and offices were closed, sales were still up by 8.9% compared to the same period in 2019, according to Kantar. Lidl posted the fastest growth compared to 2019, at 15.8 pc.

Drinks Ireland declined to comment on what MUP would mean for beverage manufacturers and suppliers, while the National Off-License Association would only say that it supports MUP “as a targeted alcohol pricing policy only for control the retail sale of alcoholic products at very low prices “. The Ibec Retail Ireland group declined to comment to what extent supermarket chains and non-licensees could benefit from the MUP. However, a spokesperson for Ibec told the Independent Sunday that Retail Ireland director Arnold Dillon wrote to Taoiseach Micheál Martin ahead of a cabinet meeting on the subject in early May to express his “very serious concern” over the imposition of the MUP without alignment with Northern Ireland. Without this approach, the MUP would increase the existing alcohol price differential between the two regions from 27 to 38 percent, Dillon told Martin, citing an assessment of Ibec’s economic impact in 2019.

Before Covid-19, cross-border alcohol sales were around € 510 million, or 7% of total alcohol purchases in the Republic, Dillon said, adding that the MUP would result in “many sensitive households at prices, which have already been hit hard by the pandemic, for shopping across the border ”.

The Ibec assessment also estimated that the move would result in a direct loss of € 94million to the Irish Treasury, as shoppers traveling to Northern Ireland would spend money not only in grocery stores and non-commerce stores. , but in a wide range of retail and hospitality outlets.