New report reveals impact of minimum unit pricing for alcohol on small retailers

The Scottish Government’s minimum unit pricing policy has been implemented as intended by small retailers in Scotland, according to new research carried out by the University of Stirling.

Minimum unit pricing (MUP) – introduced on May 1, 2018 – mandates that drinks containing alcohol must have a minimum sales price of 50p per unit of alcohol.

The University’s Institute for Social Marketing and Health (ISMH) conducted the study to evaluate changes in alcohol price, marketing practices and product range among small retailers in response to the policy. It found that the policy had been implemented as intended and had produced expected impacts on alcohol products previously sold below 50p per unit, with little or no adverse effects reported for small retailers.

Martine Stead is lead author of the new report.

Martine Stead, Deputy Director of ISMH and lead author of the report, said: “This study set out to gain an understanding of small retailers’ experiences of MUP implementation and its subsequent effects on products, pricing and consumers. Our interviews with small retailers found that they took compliance seriously and there were almost no instances of pricing below MUP when we visited stores after MUP had been introduced.

“Retailers reported that they had reduced or stopped stocking some products that had seen particularly large increases in price under MUP, for example, larger bottles of ciders. Overall, we observed the most changes in high-strength ciders and perry categories, both of which had typically been priced below MUP.”

The ISMH team conducted an observational study from August 2017 to January 2019, covering nine months before and after the policy was implemented. The study included: using electronic point of sale data to monitor trends in product availability, characteristics and pricing for 2,000 products as sold by 200 small retailers across Scotland; conducting in-depth interviews and observations in 20 stores before and after the policy came in; and analysing the retail trade press to capture information on pricing, promotional activities and experiences of MUP implementation. They also examined several key alcohol brands in detail, including Buckfast, Frosty Jack’s, Glen’s Vodka, Tennent’s lager and Strongbow Original.

Dr Nathan Critchlow, Research Fellow, is a co-author on the new report.

Dr Nathan Critchlow, a Research Fellow in ISMH and a co-author of the report, said: “Across the different parts of the study, we observed that alcohol products previously sold below 50p per unit either increased in price in line with MUP, or that small retailers stopped selling them.

“Alcohol products that were previously sold above 50p per unit generally appeared to increase in price across the study – however, it was not clear if variations in price for these products were linked to MUP, or influenced by other contextual determinants. We found no consistent evidence of prices decreasing towards MUP.

“We also observed some changes in alcohol product ranges that are plausibly related to MUP. For example, some manufacturers introduced lower strength and smaller sized alternatives for products which had previously been sold below MUP.”

During the interviews, small retailers had varying perceptions of the impact of MUP on their overall alcohol sales – some perceived that sales had declined, while others described increased profit margins for several products. Some described changes in purchasing patterns, with customers moving from higher to lower strength products, those in smaller containers, or to those perceived to offer better value now that they were sold at similar prices.

There were very few reports of hostile customer reactions, an increase in theft, or local illicit trade.

Ms Stead added: “For the small retailers themselves, implementation of MUP was reported to be generally straightforward, with little or no adverse effect on small businesses. Many felt they were better able to compete with prices in supermarkets following the implementation of MUP."

Behaviour change

The study – commissioned by Public Health Scotland – forms part of a wider programme of research designed to evaluate the implementation and impacts of MUP.

Clare Beeston, Public Health Intelligence Principal at Public Health Scotland, said: “Minimum Unit Pricing has the potential to improve Scotland’s relationship with alcohol and reduce the harm it causes, and these findings show an encouraging pattern of behaviour change emerging amongst small retailers and customers.

“Furthermore, these findings from the small retailer setting support evidence gathered earlier in the MUP evaluation that compliance with MUP amongst retailers is high and that MUP has had the most effect on the products previously sold well below 50p per unit. Other studies in the portfolio will examine how prices and product ranges changed in response to MUP in supermarkets, and how the sales of alcoholic drinks have changed across all retailers and licenced premises.

“Whilst the evaluation of MUP has some way to go, the range of studies published in the last 12 months allow us to begin to build a picture of its immediate impact.”