Alcohol Consumption

July 25th, 2011 at 3:00 pm by David Farrar

Got sent this graph by a reader in the industry. As people will know liquor advertising is blamed for a lot of things. In fact the Law Commission recommended banning all advertising and sponsorship – even Tui billboards.

While I do think breaches of the advertising standards for alcohol should carry penalties (at present you just get told to withdraw the ad), I am not convinced there is any case for an overall ban on alcohol advertising and sponsorship.

Having said that, I think there are some issues around price advertising (as opposed to brand advertising) and loss leading that are worth considering changes to.

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28 Responses to “Alcohol Consumption”

  1. ben (2,399 comments) says:

    Shouldn’t this have been on page 2 of the Law Commission report?

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  2. Graeme Edgeler (3,268 comments) says:

    “fallen -9%”

    does this double negative imply an crease of 9%?

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  3. mikenmild (10,766 comments) says:

    Seems a bit of an isolated statistic. The liquor industry would hardly continue advertising if they felt it was a failure. Maybe liquor consumption would fall faster without advertising.

    [DPF: The liquor industry say they advertise to get people to drink their brand, not to drink more.]

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  4. RightNow (6,676 comments) says:

    Ah 1987, what a time that was. I’d say I have fond memories, but seriously most of the late 80′s is just a blank.

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  5. mavxp (494 comments) says:

    Alcohol is a luxury item.

    When the economy is doing well; more people consume alcohol (mid 80s to 1987, early 2000s to 2009 GFC). When the economy is bad and people are struggling, (e.g. early 90s & Asian economic crisis in ’97) consumption falls. Currently it looks static – despite the GFC and recession we have had cheap wine in the supermarkets.

    The rest is more noise.

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  6. hj (6,374 comments) says:

    [DPF: The liquor industry say they advertise to get people to drink their brand, not to drink more.]

    With respect what a load of crap. I remember the tobacco industry using EXACTLY THE SAME ARGUMENT!

    [DPF: You might be right. However the stats do show since broadcasting advertising was allowed, consumption has fallen]

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  7. mikenmild (10,766 comments) says:

    Go hj, it is self-serving nonsense.

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  8. Chthoniid (2,029 comments) says:

    A difference with the liquor and tobacco industry however, is that getting people to consume less but of higher-margin products, will still expand profits. Tobacco doesn’t really have premium products you can move customers on to.

    If people shift from drinking mass-produced swill to premium beers or a quality wine or two instead, then the liquor industry may well be correct about the goals of their advertising efforts.

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  9. mavxp (494 comments) says:

    Of course advertising is aimed at increasing consumption. It is disingenuous to say otherwise.
    However economics trumps advertising. Advertising just chases the dollars you happen to have in your wallet once taxes, rent/mortgage payments, food, childs sports gear, petrol, car expenses, etc are taken out.

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  10. bc (1,334 comments) says:

    “Got sent this graph by a reader in the alcohol industry.”

    And there all impartiality ends. Lies, damned lies and statistics as they say.

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  11. stephen (4,063 comments) says:

    And there all impartiality ends. Lies, damned lies and statistics as they say.

    Did you see the source the graph cites?

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  12. SPC (5,397 comments) says:

    Graeme it has both “fallen and risen” since 1991 – fallen 20% by 1997 and risen 10% since then for an overall decline of 9%.

    To be precise, advertising is to promote the brand and increase take up of it – market share (at the expense of unadvertised brands), whereas price cuts such as those used by the wine industry with a surplus are to increase sales. The latter is often necessitated by economic factors. Those advocating minimum pricing are simply trying to force a permanent adverse economic environment for the purchase of alcohol on the those with low incomes – a form of prohibition by class.

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  13. CharlieBrown (910 comments) says:

    DPF – [I think there are some issues around price advertising (as opposed to brand advertising) and loss leading that are worth considering changes to]

    I thought you believed in a free market? Why don’t you apply the same logic to fast food, fast cars, rugby and any other activity that may cause detrimental effects to your health?

    Alcohol doesn’t cause society any problems, its stupid people that do. If I (and 90% of other people) can have a few drinks without committing crime or hurting myself then why can’t everyone else? Alcohol is just a scapegoat for socialist.

    People should be very afraid at the normalisation of regulation. Once tobacco is banned, alcohol will be next, with fast food facing its own special tax and advertising bans… all leading to a ban on any substance or activity that the do-good dictators deem bad for you.

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  14. Viking2 (11,147 comments) says:

    Of course the biggest killer of consumption was the tougher drink driving rules. cira 95-6-

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  15. SPC (5,397 comments) says:

    The new tougher rules on repeat drink driving offenders are clearly helping to reduce the road toll and similar moves targeting those who drink to get drunk would reduce problem drinking – such as restoring the law against being drunk in a public place and setting a blood alcohol level defining this – a level that could also be used by hosts to block entry (that would put an end to pre-loading) or to stop selling at the bar.

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  16. slijmbal (1,216 comments) says:

    As of up to 6 years ago I can say from personal exposure that excepting brand new product launches (and even then VERY occasionally) the whole loss leading accusation is a beat up. Drink is remarkably cheap to produce in volume and even with duties the likes of the supermarkets source booze at very aggressive pricing. It’s a simple volume game. They love alchohol – it makes pretty good margins on average, better than dry goods but not as good as fresh products.

    Similarly Lion/DB make bread and butter profits with their mainstream beers but have much better margins with the “upmarket” drinks and would love you to drink much more of these. These guys generally are looking to create “new” markets via new products and a slowly eat in to each other’s market share. There is more money to be made more quickly taking market share off the opposition or in selling better margin products than in relying on potential increases in consumption. They also see each other as the enemy and it’s pretty cut throat between the two.

    This issue really is down to a minority of drinkers. Surely there must be a smarter way to address this minority. Based on exposure to a fair numer of dipsomaniacs I believe that until their lives fall apart and they’re skint, the price didn’t slow them down a lot. I am sure price increases would drop the average consumed but it’s the over consumers or uncontrolled binge drinkers who need to be addressed.

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  17. wat dabney (3,672 comments) says:

    MPs probe science behind bogus gov booze guidelines
    A thorough investigation is long overdue, as the Puritanical advice of the doctor’s union, the BMA, long ago diverged from the scientific evidence…The Sheffield study admitted that “four out of five cohort studies showed statistically significant reduction of all causes of mortality between 15 per cent and 25 per cent for moderate drinking”. And “moderate” was around three pints of beer a day for men, or two glasses of wine for women, per day…

    http://www.theregister.co.uk/2011/07/20/mp_booze_science_probe/

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  18. Elaycee (4,305 comments) says:

    Some well reasoned points made here (plus the usual crap from the know all brigade) – so lets also look at some other facts:

    1. Its not so much the volume per capita but the drinks themselves. Beer consumption per capita has been declining for around 15 years and the trend has been from bulk beer to packaged product for over two decades. Wine consumption has increased over the same period. Nothing has changed.

    2. During the term covered the graph, the introduction of RTDs into the market will have also skewed the figures – especially amongst entry level drinkers.

    3. During the term covered by the graph, the NZ Wine Industry has produced many world class varietal products – esp Sauvignon Blanc. This will have influenced purchase patterns (and this affects consumption patterns).

    4. Liquor advertisements are definitely about trying to get consumers to switch brands and nothing about increasing consumption. Anyone trying to push a ‘drink more’ meme would be caned. And rightly so. In fact, there will not be one advert in NZ pushing this theme as its contrary to the liquor advertising standards.

    5. The Liquor advertising code is strict – there can be no use of role models (No Colin Meads saying ‘Drink Lion Red’ etc) and no aspirational elements in any form of advertising. Advertising criticism posted elsewhere on this thread, lacks research.

    6. A little bit of research by some posters on purchasing patterns will also confirm that liquor consumption is not affected by a recession – the only significant change will be the choice of brands (someone will purchase a cheap bourbon instead of Jim Beam etc). Indeed, in lower socio-economic areas, the consumption sometimes increases during so called “tough times”.

    7. Not 100% sure whether it still applies today, but approx 4.8% of total consumers were the designated “problem” drinkers facing the industry – drinkers who could not say ‘enough’ when they’ve had a few drinks. However, the needs of this 4.8% should not affect the ability of the remaining 95%+ of drinkers (who manage to handle their liquor in an acceptable manner) from enjoying a wine with dinner or from having a social drink responsibly.

    Agree with the posts suggesting that a target approach to the binge (and other ‘problem’ drinkers) is required. However, in the case of the teeny-bop binge drinking demographic, I fear that the horse has already bolted. Indeed, this particular issue was a predictable, social disaster just waiting to happen.

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  19. Tauhei Notts (1,611 comments) says:

    I hope that this is not too far off topic; but my point is the increasing difference in price between take home beer and the price charged at licensed establishments.
    I got 6 dozen Heineken in for my 63rd birthday last Saturday. It cost me just short of $120. Had those 72 stubbies been drunk at a licensed establishment the cost could have been as much as $432. Assuming $6 for a stubbie of Heineken; I think some places are more expensive.
    I cannot remember the exact sums but I think that 42 years ago the take away price for grog was much closer to the price charged in bars.
    The consequences of this divergence in prices must be very worrying for anybody contemplating the purchase of a licensed establishment.
    It was a great party; the whitebait (Arahura, 2010) was thawed out and was wonderful. It cost much more than the beer.
    The oysters, couriered in from Bluff, cost a damned sight more than the beer. And the smoked trout from Rerewhakaaitu was a gift and much appreciated. Kim Crawford wines were on special several weeks ago so they were acquired at an acceptable price.

    Which reminds me of the clever graffiti on the fence at the town’s saleyards years ago
    “Life is a shit sandwich; the more bread you have, the less shit you have to eat.”

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  20. Elaycee (4,305 comments) says:

    @ Tauhei Notts (918) – Happy Birthday for last Saturday. Between the Heineken, Kim Crawford, whitebait and oysters, it looks like you had a great night!

    The cost difference is mainly that restaurants and bars have to cover the costs of rent / power / labour etc whilst they purchase liquor at case quantity prices, whereas the supermarkets purchase at pallet / bulk rates and have the breweries subsidising their advertising!

    Love the saying about the bread – I’ll borrow that sometime. Hah! :)

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  21. slijmbal (1,216 comments) says:

    @elaycee – on subsidised advertising in supermarkets. This is not an alcohol specific practise – it is very widespread. It’s called co-op in one chain. Up to 50% of supermarkets’ margins came from various co-op practises when I was involved (shows they have not the greatest margins if it makes such a difference) – this ranges from discounts for better product placement, shared marketing to contributions to marketing material etc.

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  22. Manolo (13,395 comments) says:

    Forget the wowsers, prohibitionists, and prophets of doom and gloom. Enjoy life and alcohol in moderation.
    Cheers!

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  23. Elaycee (4,305 comments) says:

    @slijmbal (325) – Agree. Don’t forget the practise of charging a decent chunk of cash for advertising space either – if you want your brand positioned on a specific gondola end, the supermarket will charge $$$ for that location too. But the sheer volume of sales from the location will justify the expense. All good fun, eh? :)

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  24. tvb (4,210 comments) says:

    The solution for alcohol abuse is a massive price increase. So instead of the 3rd or 4th bottle, people have one bottle which is plenty anyway for one evening. Intoxicated people are just awful and it is time they realised it.

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  25. mikenmild (10,766 comments) says:

    It’d be nice to see some action on the full sweep of the LAw Commission’s recommendations:
    1. A new Alcohol Harm Reduction Act to replace the Sale of Liquor Act 1989
    2. Increasing the price of alcohol through excise tax increases in order to reduce
    consumption
    3. Regulating promotions that encourage increased consumption or purchase
    of alcohol
    4. Moving, over time, to regulate alcohol advertising and sponsorship
    5. Increasing the purchase age for alcohol to 20 years
    6. Strengthening the responsibility of parents supplying alcohol to minors
    7. Increasing personal responsibility for unacceptable or harmful behaviours
    induced by alcohol
    8. Cutting back the hours licensed premises are open
    9. Introducing new grounds upon which licences to sell alcohol can be declined
    10. Allowing more local input into licensing decisions
    11. Streamlining the enforcement of the alcohol laws and placing the overall
    decision-making in a new Alcohol Regulatory Authority
    12. A substantially improved and reorganised system for the treatment of people
    with alcohol problems

    A comprehensive package of measures. Unfortunately, debate only tends to pick on one or two things at a time.

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  26. SPC (5,397 comments) says:

    Just got to love it – increasing the price to reduce consumption is the gated community form of regulation, it only applies to those who cannot afford to live in the more expensive housing areas. Then the poor who complain about their inability to pay for food, power and rent get told to stop drinking – this applies whether they do or not by the way …

    Increasing personal responsibility for drinking to get drunk is all that is required.

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  27. mpledger (429 comments) says:

    The pure alcohol consumption per head of population doesn’t make a lot of sense when the underlying demography of the population has changed so remarkedly. IIRC from 1996 to 2010 those age 65+ increasesed by 30% whereas those aged 18-24 increased 2%.

    If you redid the graphs with population base being those ages 15-65 I suspect a very different picture emerges. And that makes a lot of sence in this case since advertising isn’t aimed at the 65+ age bracket.

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  28. SPC (5,397 comments) says:

    It would be interesting if they had done a historic survey with age group information in it, but the alcohol per head figures are based on total alcohol sold as to the population over 18 in those years.

    Even if there were surveys they would be dependent on peoples estimates and they would be unlikely to equate to the actual total sold. As to drinking levels I would suspect some retired folk drink more than they had in their family and careeer years and if anything alcohol consumption per head will probably increase as boomers retire.

    As to advertising – advertising of a brand at younger drinkers is intended to establish brand recognition and take up by older drinkers as well.

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