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

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

ResearchPublished Jun 19, 2012

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.

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Document Details

  • Copyright: RAND Corporation
  • Availability: Web-Only
  • Year: 2012
  • Pages: 167
  • Document Number: TR-1203-EC

Citation

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Rabinovich, Lila, Priscillia Hunt, Laura Staetsky, Simo Goshev, Ellen Nolte, Janice S. Pedersen, and Christine Tiefensee, 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. Santa Monica, CA: RAND Corporation, 2012. https://www.rand.org/pubs/technical_reports/TR1203.html.
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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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