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Impact of Scottish minimum alcohol price

The Office of National Statistics’s (ONS’s) May Consumer Price Index are the first to include the impact of the new minimum alcohol pricing in Scotland, which came into effect on 1 May 1, 2018

Management consultants Simon-Kucher & Partners calculated that the new price floor of 50p per unit of alcohol meant that the average price per unit of alcohol (PPU) increased by 10% (moving the average PPU from 53p to 58p). The company said that while Scottish alcohol sales account for just 0.2% of the total CPI basket it will benefit retailers and producers by around £90 million over the next 12 months, while if it were introduced to the rest of the country they would gain a further £750 million.

James Brown, Partner and Head of the copany’s UK Consumer & Retail said: “The new minimum alcohol price in Scotland is aimed at increasing the cost of cheap alcohol. But it will also cause a ripple of further price increases across other alcoholic drinks as retailers and manufacturers increase their prices to keep a gap with their low-cost competitors. So it’s likely that the average price increase in Scotland will eventually be even higher than 10%.

“The minimum alcohol price follows hot on the heels of the UK government’s introduction of a tax on high sugar drinks. The big difference between the two policies is where the extra revenue will go. With the Sugar Tax the winner is the Treasury who benefits from extra tax generated. With the minimum alcohol price, the alcohol producers and retailers will be the main beneficiaries thanks to higher revenues on lower volumes.”

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