Raising prices may not curb drinking, study
less consumption, says new research, calling into question the use
of high prices to encourage responsible drinking.
The US-based researchers examined alcohol sales by Sweden's state monopoly supplier of alcohol, Systembolaget, between 1984 and 1994.
They found that poorly targeted price rises for alcoholic drinks could sometimes lead to more drinking, as consumers moved over to cheaper products.
The team found that price rises weighted towards more expensive drinks led to an almost three per cent sales increase at Systembolaget, while price increases on cheaper drinks cut sales by almost two per cent.
The study complicates the debate in Britain on whether raising drink prices will help the country kick its binge drinking habit. UK alcoholic drink prices have risen less steeply than other consumer goods in the last 30 years.
Grunewald said governments looking to use cost to curb drinking should consider minimum prices instead, mainly to prevent retailer price wars on alcohol.
Grunewald said simply raising taxes did not always solve the problem. "The same tax may have different impacts in different markets and with different distributions of prices."
Alcohol producers or distributors could also funnel higher taxes into drinks that are already expensive, leaving cheaper drinks offerings untouched. Grunewald said alcohol was a "complex good" made up of different types, covering a broad price range.
Sweden, notorius for its high alcoholic drink prices and restricted selling hours, nevertheless saw alcohol consumption jump to its highest level for 100 years in 2003 - at 10 litres of pure alcohol for every person more than 15 years old.
Consumption rose again in 2004, though dropped slightly last year to around 10.2 litres per person.
Systembolaget, however, recently defended its high prices against criticism from the European Commission.
The firm, in a letter to Commission president José Barroso, said Sweden still had one of the lowest alcohol consumption rates in the EU, and that Europeans as a group still drank twice as much as people on other continents.
It said figures from the World Health Organisation estimate that 600,000 Europeans die every year from alcohol-related problems and that this costs European Union members €200bn annually.
Systembolaget said relatively low consumption figures in Sweden had little to do with culture and lay in the way drinks were sold: "Only in stores. Without profit motive. On a restricted schedule. And with high taxes."
