Alcohol Price Control - Report Example

ALCOHOL PRICE CONTROL ALCOHOL PRICE CONTROL The Home Offices of Britain as a nation normally has the responsibility of informing the government on crimes related to alcohol. They also have the responsibility to take into account the policies that help curb harms related to alcohol consumption. There is a very good establishment between violence and alcohol by the Home Offices. In response, they are determined to do away with this problem. Therefore three policies are closely considered to help tackle the harms from alcohol that are associated with the state’s economy (Francois, J., Rana, P. & Wignaraja,G. 2011, pp 34). These are imposing minimum prices on alcohol, issuing bans on sales of alcohol below the set cost, and taxes. Study then starts by tabling evidences linking the prices of alcohol and its consumption. Closely following, is a literature review on the policies’ impact on the economy of the state. Statistical data is then presented describing alcohol market. Afterwards a report is written and is expected to help in decision making relating to alcohol and its harmful effects. Introduction Alcohol plays important roles in Britain, which is economically, socially and culturally. It helps in creation of jobs and generation of revenue by taxation. In 2007, it contributed to building the economy through trading. Through accompaniment of meals, alcohol thus plays a major role in social interaction. Alcohol has always been consumed by many people, will always be consumed by many people in an organized way that is not problematic. However, some portion is always problematic and will continue to generate harmful effects to the lives of the consumers. It has been noticed that alcohol abuse is on the rise in Britain. In 1985 to 2003 alone, consumption of alcohol in this state has shot up by 4 percent. This is in accordance with the data from the Organization of World’s Health contrary to a registered decrease in other European Union States over the same period. It has been further noted that harms related to alcohol consumption have also grown (Great Britain. 2012, pp 83). For instance, in the year 2006, 8,758 people died from effects related to consumption of alcohol. This represents twice the number of people lost 15 years earlier. Implications of minimum pricing In order to intervene and tackle misuse and consumption of alcohol, the British government proposed to come up with a minimum price. This simply refers to the price paid for every unit to ethanol that is in pure form ad any beverage containing alcohol. This policy states that the retailers can’t sell beverages containing alcohol below the minimum price set. This law is what has been used for products like tobacco. Minimum pricing policy ensures that retailers absorbability to the new prices increase because all the alcohol sold under the minimum unit become expensive more (British Retail Consortium. 2007, pp 108). The policy of minimum unit pricing will have important meaning to the hazardous and young drinkers. More affected are the low earners who will now turn to cheaper alternative drinks. As a result of higher pricing in this policy, the prices on trade are more likely to be affected that the retailers. As a matter of fact, the government does not generate any revenue from this policy. On the other hand, this policy will have implications to the public. Evidences from the pas clearly show a positive relationship between consuming alcohol and income. There is a direct proportionality between these two (British Retail Consortium. 2007, pp 109). So when the prices sky rockets while income is constant, then there is a probability that consumption will go down due to affordability. Thus this is the general observation. Demand- Supply Price elasticity Studies show that the demand and supply of alcohol are relatively sensitive to any change in pricing of alcohol. Meaning when the price shoots up, alcohol related harm goes down. Hazardous drinkers go for cheaper alcohol with the assumption that they are maximizing on the intake of ethanol (Collins, J. Grayson, A. & Johal, S. 2010, pp 212). Cheaper alcohol sold off trade has more hazardous influence on consumers including the young males who can now not afford the more expensive on trade alcohol. It is also found that the sales of no trade alcohol have dropped due to the increase in price. In research carried out through meta-analysis, it was found that for every beverage, the price increase directly affected negatively, the consumption. Precisely, the average elasticity of beer was -0.46, wine -0.69 and the spirits -0.46 (University of Stirling. 2013, pp 63). All these average elasticity resembles medial elasticity. Generally, it was found that beer responds slowly to the changes in pricing. Economic analysis The retailers’ ability to stock has been greatly reduced due to the higher prices of alcohol. As a result high prices that are charged, minimum prices affect the trade alcohol on the licenses. Price of Alcohol and consumption The producers and the supermarkets are all faced with this minimum pricing policy. Therefore they may use a no price approach of competition, for instance rebranding, advertising or firm acquisition during their chains of supply. This will act as a strategy to help minimize the effects of minimum pricing. There is also some element of international evidences on induced cross borders shopping. Here some significant taxation and pricing differentials induces consumers to involve in the cross borders consumption of alcohol. This is however dependent on factors like the difference in prices, fluctuation of the rates of exchange, cost plus cross borders travels. People’s preferences are also a factor. They purchase most of the alcohol abroad not minding if the total cost, transport inclusive, may negate any saving (Collins, J. Grayson, A. & Johal, S. 2010, pp 241). In general, an increase in the unrecorded alcohol consumption can rarely cancel the decrease in the recorded alcohol consumption at any particular time. Indices of alcohol price relative to retail price index, real households disposable income (RHDI) and affordability of alcohol, 1980 to 2007 United Kingdom Conclusion Minimum pricing can effectively control alcohol related harms. It is based mainly on evidences and theories that the drinkers do respond to the changes of pricing of beverages containing alcohol in a more or less similar way that they do respond to the changes of pricing of other products they consume. Minimum pricing could be best effectively used by the government to slow the consumption of alcohol. Nonetheless, this approach also leads to a decrease in the occurrences of harms related to alcohol consumption. Bibliography Great Britain: Department of Health 2012. Government Response to the House of Commons Health Select Committee First Report of Session 2012-13: Education, Training and Workforce Planning, Volume 8435 of Cm Series. Retrieved from http://www.publications.parliament.uk/pa/cm200910/cmselect/cmhealth/151/15114.htm [Accessed 6 Sep. 2012] Great Britain: Parliament: House of Commons: Health Committee 2012. Governments alcohol Strategy: third report of session 2012-13, Vol. 1: The Stationery Office. Retrieved from http://www.parliament.uk/briefing-papers/commons-standard-notes/health-services-and-medicine/alcoholism/2013/ [Accessed 19 July 2012] Francois, J, Rana, P & Wignaraja G. 2011. National Strategies for Regional Integration: South and East Asian Case Studies. Anthem Press. Retrieved from http://www.ncbi.nlm.nih.gov/pubmed/23078488 [Accessed 18 Oct. 2012] University of Stirling. 2013. Health First: An Evidence-Based Alcohol Strategy for the UK. Retrieved from http://www.stir.ac.uk/media/schools/management/documents/Alcoholstrategy-updated.pdf [Accessed 1 March 2013] Collins, J, Grayson, A, & Johal, S. 2010. Econometric analysis of Alcohol Consumption in the UK. Retrieved from http://www.hmrc.gov.uk/research/alcohol-consumption-uk.pdf [Accessed 17 Nov 2010] British Retail Consortium, 2007. British Retail Consortium. The Stationery Office. Retrieved from http://www.alcoholconcern.org.uk/media-centre/news/minimum-unit-pricing [Accessed 17 Jul. 2013] Read More