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Editorials

The “alcopops” tax: heading in the right direction

Tanya N Chikritzhs, Paul M Dietze, Steven J Allsop, Michael M Daube, Wayne D Hall and Kypros Kypri
MJA 2009; 190 (6): 294-295

Evidence shows that cost does affect alcohol consumption, and reducing consumption improves public health

There is strong evidence that increasing the cost of alcohol reduces the overall amount that is consumed.1 In a range of countries, price increases have been consistently shown to reduce alcohol consumption and related harms in both the general population and at-risk populations such as young people and heavy drinkers. Conversely, price decreases have resulted in an increase in consumption and harm.1-3 In this context, the Australian Government’s April 2008 increase in excise tax (Bill introduced on 11 February 2009) on ready-to-drink (RTD) spirit-based products (RTDs; “alcopops”) is an evidence-based strategy to reduce excessive RTD consumption among young people. The alcoholic content of RTDs is now taxed at a similar rate to that of other spirits (tax increased from $39.36 to $66.67 per litre of pure alcohol).

Critics have argued that the RTD tax increase has not reduced alcohol consumption by young people, and will not do so. One claim is that young people will merely switch to other beverages. These arguments have been made by some from the alcohol industry and some researchers. Doran and Shakeshaft, for example, argued that young people “ seem to be price inelastic about their alcohol demand”.4 Citing a national school survey, they claimed that “spirits are by far the beverage of choice for the 45% of 16–17-year-old Australians who drink, despite spirits being the most highly taxed beverage in Australia, and the most expensive per litre of alcohol”. This is not evidence for price inelasticity. They also argued that “overall rates of usual or binge consumption in Australia are unlikely to substantially fall, because spirits hold a smaller market share than beer, and young people will more than likely switch their preference”.4 The weight of scientific evidence suggests otherwise — that overall consumption is likely to decline because young people’s demand for alcohol is elastic.1-3

The survey series on which Doran and Shakeshaft rely shows that beverage preferences vary between boys and girls and over time. In 1999, before reductions in tax and in the retail price of RTDs in 2000, RTDs were the preferred beverage of about 23% of 12–17-year-old female drinkers. By 2005, after the tax decrease, 48% of young females drank RTDs, while the preference for higher-taxed spirits fell from 42% to 30%. For 12–17-year-old males, RTD consumption increased from 6% to 14%, a small share compared with spirits (39%) and beer (33%).5 Although new products and marketing strategies may have contributed to this substantial change, these data suggest that young Australians, like their counterparts in other countries,2 do alter their beverage choices in response to price changes.

Definitive statements about the impact of the “alcopops tax” are premature in the absence of independent alcohol sales data. It is regrettable that there are no readily available, official monthly sales data for all alcoholic beverages, like those obtained by the detailed monitoring that we know is conducted by private industry.6 However, available evidence does indicate that the tax has reduced sales of RTDs and the reduction was far from wholly offset by a switch to other beverages.

A market research company that regularly compiles reports on sales of alcohol products has estimated national monthly sales of packaged alcohol (sold for off-premises consumption by liquor licensees across the five mainland states of Australia) by beverage type for 2007 and 2008 ().7 These data show that in the 3 months after the April 2008 tax increase, 91 million fewer standard drinks were sold as RTDs than in the same months in the previous year. Standard drinks sold as spirits and beer increased but wine sales decreased. The increase in spirit and beer sales (48 million standard drinks) was only 53% of the 91 million fewer RTD drinks sold.

A decline in RTD sales was also reported on the basis of Australian Tax Office data. These showed a 54% reduction in sales of RTDs and a 7% increase in spirit sales from April to June 2008.8 In presenting the Excise Tariff Amendment Bill to Parliament, the Minister for Health and Ageing confirmed that: “Tax office figures drawn from the first nine months of this measure show that alcopops sales have dropped by 35 per cent compared to the previous year”.9

Critics have been hasty in predicting that young people’s drinking would be unresponsive to the RTD tax increase. In keeping with a large body of research evidence, the early indications are that RTD sales declined in the first few months after the tax increase. Previous research suggests that this decline in alcohol sales (a reliable proxy for consumption10) will produce a public health benefit.1-3 Further investigation is needed to determine specifically in which population group(s) the benefit accrues; for example, whether this reduction in RTD purchases occurred primarily among young drinkers (the target of the tax increase), and what other factors may have contributed to the reduction. Informed policy debate requires independent evaluations of short-term and long-term effects of these tax changes on consumption and harm indicators (eg, injuries). Nevertheless, the evidence to date is that the “alcopops” tax is a step in the right direction.

Number of standard drinks* consumed in May to July, 2007 and 2008, by beverage type

Beverage type

Million standard drinks consumed


Difference in million standard drinks

% Change

2007

2008


RTDs

348

257

91

26.1

Beer

886

899

13

1.5

Wine

797

776

21

2.6

Spirits

313

348

35

11.2

Total

2344

2280

64

2.7


Source: Nielsen Liquor Services Group (NLSG) 2008.7 RTDs = ready-to-drink spirit-based products.
* One standard drink = 10 g pure alcohol. To accurately convert beverage volumes to pure alcohol, the NLSG applies alcohol conversion factors at the subsegment level for beer (eg, regular, mid-strength, low-strength beer) and RTDs. Average alcohol contents by beverage type: RTDs 5.0%; beer 4.8%; straight spirits 38.0%; and wine 13%.

Acknowledgements

We thank Michael Walton of The Nielsen Company, who advised on the description and interpretation of the alcohol sales data described in this editorial.

Competing interests

The Distilled Spirits Industry Consortium Australia funded the airfare for Steven Allsop to speak on the topic of evidence on effective prevention responses to alcohol problems at a meeting.

Author detailsTanya N Chikritzhs, BA(Hons), PostGradDip(Epi&Biost), PhD, Associate Professor1Paul M Dietze, BSc(Hons), PhD, Associate Professor2Steven J Allsop, BSc, PhD, Professor and Director1Michael M Daube, BA(Hons), HonDSci, Professor of Health Policy3Wayne D Hall, BSc(ApplPsych), PhD, Professor of Public Health Policy4Kypros Kypri, BA(Hons), PhD, Brawn Research Fellow5

1 National Drug Research Institute, Curtin University of Technology, Perth, WA.

2 Burnet Institute, Melbourne, VIC.

3 Public Health Advocacy Institute of Western Australia, Curtin University of Technology, Perth, WA.

4 School of Population Health, University of Queensland, Brisbane, QLD.

5 School of Medicine and Public Health, University of Newcastle, Newcastle, NSW.

Correspondence: T.N.ChikritzhsATcurtin.edu.au

References
  1. Wagenaar AC, Salois MJ, Komro KA. Effects of beverage alcohol price and tax levels on drinking: a meta-analysis of 1003 estimates from 112 studies. Addiction 2009; 104: 179-190. <PubMed>
  2. Grossman M, Chaloupka F, Saffer H, Laixuthai A. Effects of alcohol price policy on youth: a summary of economic research. J Res Adolesc 1994; 4: 347-364.
  3. Collins DJ, Lapsley HM. The avoidable costs of alcohol abuse in Australia and the potential benefits of effective policies to reduce the social costs of alcohol. National Drug Strategy Monograph Series No. 70. Canberra: Australian Government Department of Health and Ageing, 2008. http://www.nationaldrugstrategy.gov.au/internet/drugstrategy/publishing.nsf/Content/0A14D387E42AA201CA2574B3000028A8/$File/mono70.pdf (accessed Feb 2009).
  4. Doran C, Shakeshaft A. Using taxes to curb drinking in Australia. Lancet 2008; 372: 701-702. <PubMed>
  5. White V, Hayman J. Australian secondary school students’ use of alcohol in 2005. National Drug Strategy Monograph Series No. 58. Melbourne: The Cancer Council Victoria, 2006. http://www.nationaldrugstrategy.gov.au/internet/drugstrategy/publishing.nsf/Content/85D7B21B3E 3A993ECA2572250007755F/$File/mono58.pdf (accessed Feb 2009).
  6. Hall WD, Chikritzhs TN, d’Abbs PHN, Room RGW. Alcohol sales data are essential for good public policies towards alcohol [editorial]. Med J Aust 2008; 189: 188-189. <eMJA full text> <PubMed>
  7. Nielsen Liquor Services Group. RTD consumption: what’s happened since the RTD excise change? Sydney: NLSG, Sep 2008.
  8. Oakes L. Sobering stats on alcopops. Daily Telegraph 2008; Aug 2. http://www.news.com.au/dailytelegraph/story/0,22049,24113156-5001031,00.html (accessed Feb 2009).
  9. Roxon N, Minster for Health and Ageing. Excise Tariff Amendment (2009 Measures No. 1) Bill 2009. Second reading. House of Representatives Votes and Proceedings. Hansard. Wednesday 11 February 2009. Canberra: Parliament of Australia, 2009: 3-6. http://www.aph.gov.au/Hansard/reps/dailys/dr110209.pdf (accessed Feb 2009).
  10. Department of Mental Health and Substance Dependence, Noncommunicable Diseases and Mental Health Cluster, World Health Organization. International guide for monitoring alcohol consumption and related harm. Geneva: WHO, 2000. http://whqlibdoc.who.int/hq/2000/WHO_MSD_MSB_00.4.pdf (accessed Feb 2009).

(Received 24 Nov 2008, accepted 16 Feb 2009)


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