Further study on the affordability of alcoholic beverages in the EU

A focus on excise duty pass-through, on- and off-trade sales, price promotions and statutory regulations

by Lila Rabinovich, Priscillia Hunt, Laura Staetsky, Simo Goshev, Ellen Nolte, Janice S. Pedersen, Christine Tiefensee

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Policies related to alcohol pricing, promotion and discounts provide opportunities to address harms associated with alcohol misuse. However, there are important gaps in information and knowledge about the regulations in place across parts of Europe and their impacts on consumer prices and locations of purchase.

Using market data, we explored the overall scale and trend of price promotions and discounts in the off-premise (e.g. supermarket) and on-premise (e.g. restaurants, pubs) across five EU Member States. To better understand the factors that may influence sales in the on- vs. off-premises, we performed regression analysis for four EU Member States with relevant data. This found that increases in broadband penetration and population density were associated with relatively higher levels of off-premise alcohol purchases and that increases in income were associated with relatively higher levels of on-premise purchases of alcohol. There was no statistically significant relationship for female higher education.

We further used time-series methods, drawing on data for Ireland, Latvia, Slovenia and Finland, to estimate the impact of changes in excise duty on price ('pass-through'). This showed that a €1 increase in excise duty increased beer prices by €0.50-€2.50 in the off-premise, and increased spirits prices by €0.70-€1.40 in the off-premise. These findings suggest that, depending on the price sensitivity of consumers and other strategies employed by suppliers (e.g. advertising), changes in excise duty may be an effective instrument to reduce harmful alcohol consumption.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Pass-through of excise duties to alcohol prices

  • Chapter Three

    On- and off-premise consumption of alcohol in the EU

  • Chapter Four

    Discounts and promotions in alcohol sales across the EU

  • Chapter Five

    Regulations affecting alcohol prices

  • Chapter Six

    Closing remarks

  • Appendix A

    Study methodology

  • Appendix B

    Methodology for adjusting price data in Ireland

  • Appendix C

    Further statistical description of pass-through

  • Appendix D

    Further description of prices and excise duties across the European Union

  • Appendix E

    The alcohol value chain and factors determining prices

  • Appendix F

    Further consideration of pass-through implications

  • Appendix G

    Alcohol price and retail – data collected by Member States' statistical offices

  • Appendix H

    Responses from 2011 WHO-EC alcohol survey

  • Appendix I

    The effects of tax changes on cross-border and other unrecorded consumption

Research conducted by

The research described in this document was prepared for the European Commission DG SANCO and the Executive Agency for Health and Consumers and conducted by RAND Europe.

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