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Minimum alcohol price could boost pubs and off-licences

The PM's determination to emulate the Scottish Parliament might narrow the gap between off and on-trade prices.

This week I'm examining the impact of the proposed minimum unit price for alcohol on the pub and off-licence sectors.

David Cameron, who is generally ideologically averse to solving health problems with regulation, recently admitted that we need to look at the price of booze.

This could pave the way for replicating the minimum unit price, set at 45p, adopted over the border in Scotland.

The British Medical Association has long lobbied for such a move, but it's the first time the PM has risked the ire of his drink-loving electorate by appearing to endorse the idea.

Publicans will watch developments keenly. Among the many reasons given for the high closure rate of pubs - currently running at two a week - is the growing gap between the cost of visiting the pub and drinking at home. 

In the 70s more than 90% of beer consumed was bought in pubs and clubs, but recently supermarket beer sales overtook those of pubs for the first time.

The average price of a pint, which in 1987 was 93p, now stands at around £3.09. If it had risen in line with inflation it would be £2.18. Supermarket beer can cost as little as 30p a pint - almost 300% cheaper than the average pub pint.

Shot in the arm

A minimum price, then, could be a shot in the arm for the pub trade. Added to the recent news that pub closures have slowed sharply, perhaps the sector's luck is beginning to turn.

"Added to the recent news that pub closures have slowed sharply, perhaps the minimum-price proposal suggests that the sector's luck is beginning to turn"

It would arguably also boost increasingly atomised communities. I live in London and on the rare occasions where people deign to speak to one another, it's often a cyclist remonstrating with a driver or people tutting on the tube.

The pub is one place where Londoners genuinely relax and talk amicably to strangers.

Minimum pricing is not so good, you might think, for the off-licence trade. And yet, it is supermarkets who most heavily discount alcohol. Independent retailers cannot afford to have loss leaders as Tesco or ASDA do, so minimum pricing might actually level the playing field.

One thing that will affect all sellers of alcohol, and indeed food retailers and restaurants, is the ongoing drought in the South East and East Anglia. 

Food prices are set to rise unless drought-afflicted areas get around 120% of normal rainfall in the next month - so perhaps it's time with to pray for rain or do a rain dance, depending on your spiritual outlook.

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Adam Bannister

About the author

Adam Bannister writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other industry publications.

@Be_TheBoss

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