A different kind of problem

Posted by on Feb 12, 2012 in American Beer, Beer Duty, Editorial | One Comment

Since we began following the issue of taxation and duty on British beer, one term has come sharply into focus:-

“As part of the Coalition Agreement, the Government committed to reviewing alcohol taxation to tackle problem drinking without unfairly penalising responsible drinkers…”

Review of Alcohol Taxation, HM Treasury 30/11/2010 pdf

“By setting a minimum price for a unit of alcohol, we can raise the price of cheap supermarket white ciders, lager and value spirits sought out by problem drinkers.”

Nicola Sturgeon, Cabinet Secretary for Health and Wellbeing, Scottish Parliament

These two statements were made about very different responses to the modern perils of drink. The first related to the UK-wide introduction of High Strength Beer Duty (HSBD) – whereby all brewers of beer over 7.5%abv now pay a higher rate of tax. The second was a quote regarding Scotland’s draft bill on minimum pricing – long championed by the SNP – and destined to become law here sometime this year.* Both repeated the idea that these policies were devised to help ‘problem drinkers’. Both will see the price of alcohol increased.

*The latest update is that during the past week Ms Sturgeon met with Brussels counterparts, afterwards reiterating that the SNP believe setting a minimum price per unit of alcohol would comply with EU law. However, the European Commissioner for Health and Consumer Policy stated that it still wasn’t fully clear that the SNP scheme wouldn’t be illegal. Expect this to a) run and run; and b) end up in the courts.

It’s our opinion that the HSBD measure will not help these people, who will switch to other forms of alcohol (if they haven’t already). As beer over 7.5% constitutes >0.5% of UK alcohol sales, it’s not going to raise a significant amount of money for the Treasury either. The issue of minimum pricing is less black and white. Firstly, the actual price needs to be decided upon (45p has been rejected, rumours of 50p abound), Secondly, unless it’s north of 80p it won’t affect the on-trade – the booze boffins at Sheffield University are already talking about differential minimum pricing (i.e. 30p/unit off-trade versus 80p/unit on-trade). Thirdly – as this isn’t a tax (just a price increase), all the extra money raised will pour into the Supermarkets.

On Friday the BBC reported that a significant group of ‘problem drinkers’ were taking the matter of their health to the US courts. The Oglala Sioux are asking for $500m (£316m) for healthcare, social services, and child rehabilitation for the people of the Pine Ridge reservation in South Dakota. The lawsuit has been filed against a familiar line-up of names – Anheuser-Busch InBev Worldwide, SAB Miller, Molson Coors Brewing Company, MillerCoors LLC, and Pabst Brewing Company. These four (and Pabst) can be considered as ‘big beer’ – so are the Oglala Sioux going after them in the same way as others have taken on ‘big tobacco’ and ‘big pharma’?

The reason behind their specific targeting of the macro-beer giants lies over the state line in Whiteclay, Nebraska. The town would give Portland a run for it’s money as ‘beervana’ if the issues involved weren’t so cripplingly awful. With a population of 14, the tiny community serves only one purpose – to sell alcohol to the residents of the Pine Ridge reservation. The people there drive two miles to Whiteclay as alcohol sales are illegal on tribal lands. The four off-licenses in the town (who have also been named in the suit) sell only beer – but at staggering amounts. In 2010, the four bottle shops combined to sell 4.9 million cans to the Pine Ridge community – 12,300 every day.

In America, this is an infamous story dating back decades – local Indian groups have long led marches and urged action from local and national Government on the issue. But over here, the article generated by the lawsuit brought the story to public attention for the first time. To be fair, the tiny town also sold $2.7m worth of groceries in a year, so the citizens of Pine Ridge clearly conduct most of their transactions there (as Nebraska doesn’t levy sales tax on food, unlike South Dakota). But roast chicken doesn’t make the same kind of headlines as alcohol.

I wonder what would happen to the ‘problem drinkers’ of Pine Ridge – there are obviously a huge number of them – if something similar to the British proposals were attempted there? The documentary The Hidden Massacre of Whiteclay (YouTube link) reveals that where previously brands such as Budweiser were the big sellers, these days they have been replaced by blindingly strong malt liquors such as City Brewery Evil Eye (10%) and Camo 900 High Gravity Lager (9%). Under the HSBD rise, and if there were a minimum pricing scheme, these cans would become significantly more expensive to buy.

How significant depends on each individual person – as everyone’s situation will be different, of course. But the key aspect of both of these pieces of legislation is the notion of pricing people out. But onto what? What would be the next steps in Whiteclay? Would the citizens of the reservation revert to Budweiser? Or would something else fill the vacuum? When you put frameworks in place to make a drug more expensive to the people who abuse it, what will be the outcome? I’m not sure anyone really knows.

The lawsuit from the Oglala Sioux stands a small chance – but you can imagine ‘big beer’ will gather together many legal minds to defend themselves. If they do so successfully, what happens to the people of Pine Ridge, only time will tell.

1 Comment

  1. Martini
    February 13, 2012

    By your logical argument, it appears there’s an ulterior motive for introducing that tax. Politicians are sneaky and weaselly. Although beer is not one of my vices, I know the minimum price for a bottle of beer in Canada is one dollar.

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