Transcript A Healthy Alcohol Marketplace: Why We Can’t Sell Alcohol

By Pamela S. Erickson, M.A., CEO
Public Action Management, PLC
Former Director, Oregon Liquor Control Commission
NW Alcohol Policy Conference, Boise , Idaho, July 19-20, 2012
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CDC estimates 79,000 deaths
occur due to alcohol annually.
Contrast with 6,000 people lost in
two wars.
Despite progress on underage
drinking, it is still unacceptably
high.
Alcohol is a causal factor in crime,
domestic violence and other social
problems.
In 2010, 10,228 people died and
345,000 were injured from drunk
driving crashes.
If a new product came on the
market and created that number
of tragedies, there would be mass
hysteria!
Learning segments:
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Why common business practices
create problems for alcohol.
How alcohol regulations work to
curb these business practices.
What research says about alcohol
regulation.
Examples of deregulation and
problems that ensued.
Ways to strengthen alcohol
regulation relating to price,
promotion, product and place.
What communities can do.
So why do we need special regulations for
businesses that sell alcohol?
Because some
normal business
practices — quite
legitimate for other
commodities —
may produce social
harm when alcohol
is sold.
As an illustration, imagine you decide to
buy a floral business…
Your
business plan would include:
1. Efforts to retain and increase customers who
are “frequent buyers” of flowers
2. Discounts and promotions to gain new
“flower-loving” customers
3. Advertising to young people to build a
future customer base
Your business plan calls for:
 Marketing to heavy drinkers
and alcoholics. Estimates of
underage market are 11-18%; 520% drink heavily or above
recommended levels.
 Use of volume discounts to
encourage heavy use.
 Marketing to youth to
encourage present and future
alcohol use.
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Market Regulations
Prevent this
Scenario: Large
Quantities of Cheap
Alcohol Widely
Available and
Heavily Promoted
1. Price: keeps prices reasonably
high and prevents price wars. Low
prices increase consumption,
particularly among youth.
2. Promotion: curtails or bans
promotions that encourage high
volume consumption.
3. Product: controls or bans
dangerous or high potency products.
4. Place: limits availability
(locations, days and hours)
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Credible research from public
health officials such as the Centers
for Disease Control and the World
Health Organization have
confirmed the effectiveness of
basic alcohol regulations.
Example: “Alcohol, No Ordinary
Commodity,” Second Edition):
the strong strategies are
“restrictions on affordability,
availability and accessibility, as
well as drink-driving deterrence
measures”
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Alcohol sold primarily in “Tied
House” saloons. Large, out of state
manufacturers own many retail
outlets.
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Most common drink was beer, sold in
glasses, kegs and buckets.
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Aggressive sales promoted high
volume drinking.
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Social problems: public disorder,
intoxication and addiction, family
wages squandered, prostitution,
gambling.
The saloon system is ancient history.
It can’t happen today.
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But deregulation in the United
Kingdom has fostered an alcohol
epidemic.
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Today alcohol is available in bars,
clubs and grocery stores 24 hours
a day, 7 days a week.
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Underage drinking rates are twice
ours; hospitalization and disease
due to alcohol have doubled in
just 10 years.
Source: Oxford Univesity Press, Medical Council
on Alcohol, c 2012
Four large chains control 75%
of the market.
 Most use alcohol as a “loss
leader”.
 Pre-drinking, before going to
bars, has increased.
 The large chains are locked in
price wars.
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Costco re-wrote 60 pages of state alcohol
laws and gave $22 million to a campaign to
pass a ballot measure in November 2011 to
privatize spirits and deregulate wine.
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The re-written statutes have increased
availability of spirits from 328 state stores
to over 1,500 outlets (and more are likely)
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Private system started June 1 and no one
seems happy! Simplistic ideas dealing with
complex problems rarely work.
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* Supermarket chains have
become a dominant force in the
alcohol market. They want to
sell all forms of alcohol in
lightly regulated environments.
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* Many new outlets as drug
stores, convenience stores,
“dollar stores” apply for
licenses.
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* Governments are desperate
for revenue and seem willing to
ignore likely consequences.
American Alcohol Consumption
5%
Do not drink
15%
Drink 1 - 11 per year
39%
Drink 3 or less per week
Moderate drinkers
Heavy drinkers
29%
12%
This isn’t Russia. Democracies
require slow deliberation for
wise decision-making. (In
contrast, Russia solved
problems with casinos in 2009
by closing them all down!)
 Industry has considerable
power. Meanwhile public
health is often silent due to
grant prohibitions on
“lobbying.”
 It pays to be very careful when
considering deregulation as it
will be difficult to revert back.
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Availability. Allows alcohol to be sold by the bottle and the drink,
but limits the number, location, types of alcohol products, and hours
of outlets.
No “Bargain Booze”. Regulations balance prices, control price
competition, and restrict dangerous marketing and promotional
practices.
Children and Teens. Age restrictions protect young people from the
serious problems of underage drinking.
Drunk driving. Creates and enforces strict measures against drinking
and driving—sobriety checks, blood alcohol limits, driver’s license
suspension.
Education and Enforcement. Uses the carrot of education (alcohol
awareness programs, “schools” for offenders) and the stick of
enforcement (fines, community service and jail) when education fails.
 Source: Adapted from World Health Organization recommendations.
 Taxes usually work but are
politically difficult to
increase.
 There are other ways that
may be easier: fee increases,
new fees, special privilege
fees (late night), rules
against multiple buys for
reduced price.
 In some states, the alcohol
industry supported some
increased fees.
State liquor boards may
have authority to
remove such products.
 Control states may delist products sold in
state stores.
 Community pressure on
local stores.
 Community pressure on
manufacturer.
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Many states have specific
rules or laws prohibiting
volume discounts, coupons
and multiple buys.
Some states have rules
against high volume drink
promotions.
Some states allow local
communities to have such
rules.
It’s possible to get industry
support as good licensees do
not like risky practices.
Many states have quotas
on various types of
licenses and/or give
communities some say
in license decisions.
 Other ways: zoning,
local ordinances,
nuisance statutes.
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Education about the value of
our regulatory system and the
importance of price, promotion
and availability.
Survey community
environment to assess prices,
promotions and availability of
alcohol.
Review current regulatory
measures that impact price and
availability.
Advocate for current and
enhanced regulatory systems.
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Alcohol regulations impacting price, product, promotion
and place are some of the strongest and most effective
strategies as confirmed by credible public health research.
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Deregulation usually results in serious social problems that
are hard to reverse.
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Community leaders should review their state and local
regulations to see how they could be strengthened or better
enforced to help reduce alcohol problems.
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Community coalitions can be very effective in making
changes and can even get local business support.
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“2012 Issue Briefs for States, Brief Explanations of Common Regulatory Issues
Facing State and Local Communities,” www.healthyalcoholmarket.com
“Alcohol Outlet Density and Public Health”, Alcohol Justice (formerly The Marin
Institute): www.alcoholjustice.org
“Alcohol Policy Research & Alcoholic Beverage Control Systems: An Annotated
Bibliography & Review,” NABCA, National Alcohol Beverage Control Association.
“Preventing Excessive Alcohol Consumption,” Guide to Community Preventive
Services, www.thecommunityguide.org
“The Dangers of Alcohol Deregulation: The United Kingdom Experience: 2012
Update,” Pamela S. Erickson, www.healthyalcoholmarket.com
“The High Price of Cheap Alcohol,” Pamela S. Erickson,
www.healthyalcoholmarket.com
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Toward Liquor Control, Raymond B. Fosdick and Albert L. Scott, Center for Alcohol
Policy, www.centerforalcoholpolicy.org
“What are the most effective and cost-effective interventions in alcohol control?”
World Health Organization, February 2004
“Today’s alcohol demands a closer look,” National Alcohol Beverage Control
Website has:
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Monthly newsletter, educational
pieces, PowerPoint presentations
from conferences. (These are free!)
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Recent updated report on UK, “The
Dangers of Alcohol Deregulation:
the United Kingdom Experience,
2012 Update” can be downloaded
from website.
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Issue Briefs for 2012 has simple
explanations of alcohol regulatory
issues as well as citations for research
and more information.