MUP has ‘minimal’ economic impact on Scotland’s drinks industry, says report
MUP came into effect in Scotland on May 1, 2018, in an effort to tackle the harm caused by cheap, high-strength alcohol.
It means that every alcoholic drink has a minimum price based on the amount of pure alcohol it contains: set in Scotland at 50p per unit.
As the first country to introduce MUP, a key question for Scotland and policy-makers has been the economic impact of the restrictions. But a new report says that "looking across metrics and sectors, the consistent conclusion is that pre-MUP trends in Scotland have been broadly maintained."
MUP impact 'modest' against wider factors
Published by the public health agency this week, the report considered key industry performance metrics such as the number of firms, employment, turnover, output value and GVA.
Pre-MUP trends in Scotland were broadly maintained after 2018; and - where there are declines in key industry metrics such as employment in 2020 and 2021 - this likely reflects the impact of COVID-19 rather than MUP, says the report.
While COVID-19 does provide a curveball to interpreting the statistics, researchers note that - on the occasions England and Wales provide a point of comparison - post-MUP data tends to move in a similar way to these non-MUP markets.
Premiumization
However, the researchers do highlight that this does not mean that MUP has had no effect on the industry at all.
"This study suggests that the overall economic impacts of MUP across the alcoholic drinks retail and production sectors in Scotland were immediate and, in general, modest within the context of significant external factors such as Brexit and the COVID-19 pandemic.
"Individual businesses are likely to have been impacted differently depending on the market served."
For example, the main beneficiaries have been premium brands just above the MUP price point: who did not need to change their pricing in response to MUP but have seen the price difference between their products and economy products narrow - making it more attractive for consumers to trade up to their brands.
This, conversely, is bad news for own label or lesser known brands.
“MUP appears to be consistent with and potentially accelerating other drivers of performance such as a perceived ‘premiumisation’ of consumer preferences towards branded and more expensive products," say the researchers, although they note that much of their data comes from before the cost-of-living crisis became a front-of-mind concern.
A second key finding of the report was that the impact of MUP on consumers and producers were perceived to have played out quickly.
“Almost everyone we spoke to for our case studies felt that the major changes had already taken place by the time of the Baseline and Initial Impacts Report in the first half of 2019, and that industry had ‘moved on’ since then with MUP largely not a day-to-day concern,” note researchers.
The report can be found in full here. A further report, drawing on findings from various published studies, is expected later in 2023.
