Off-trade

MUP sees higher off-trade sales than pre-pandemic

Six months into Minimum Unit Pricing legislation and off-trade alcohol sales remained higher than pre-pandemic levels although they are down on last year.
A NielsenIQ consumer study conducted in April 2022 found that 88% of people had noticed a difference in the price of alcohol products since the introduction of MUP, with 60% stating that they'd reduce their expenditure on alcohol as a result.

A NielsenIQ consumer study conducted in April 2022 found that 88% of people had noticed a difference in the price of alcohol products since the introduction of MUP, with 60% stating that they’d reduce their expenditure on alcohol as a result.

The return of the on-trade is likely to be significant in this off-trade decline.

The latest NielsenIQ Scantrack data for off-sales notes, however,  that this drop in off-trade sales volumes this year was sharper than that in the UK where – with the exception of Scotland – MUP policy has not been  implemented.

MUP was introduced here on January the 4th last, setting a minimum price of €1 per unit/10g of alcohol.

Despite the fall on last year’s figures, off-trade sales in the first 16 weeks of 2022, at 60.4 million litres, are still 11% higher than 2019’s 54.4 million litre levels for the same period according to NielsenIQ.

However NielsenIQ goes on to state that year-to-mid-June off-trade figures indicate a fall of €84 million or 22 million litres compared to that sold over the same period last year, with beer sales accounting for 52% of the decrease in value, spirits 16%, and wine 32%.

As such, it’s still too early to take any meaningful reading of the effects of MUP on alcohol consumption here – especially with there being so many unconnected variables at play in 2022.

A NielsenIQ consumer study conducted in April 2022 found that 88% of people had noticed a difference in the price of alcohol products since the introduction of MUP, with 60% stating that they’d reduce their expenditure on alcohol as a result.

The number of economy-priced spirits brands has reduced in Ireland since most were delisted due to a lower price differential, pointed out NielsenIQ’s Senior Business Insights Manager Ruth Lloyd-Evans in the Irish Times recently.

Larger unit sizes are also declining in sales; for example 700ml and larger bottles accounted for 61% of sales prior to MUP and have fallen to 55% since MUP, she explained, although wine products have been less affected with sales in the €9 to €10 price bracket increasing from 26% to 41%.

Cross border trade

With the introduction of MUP in RoI the price discrepancy in relation to  Northern Ireland has risen to 48% from 27% according to an early review of MUP from Movendi International, a global alcohol prevention group. This has led to a growth in cross-border alcohol purchases with the loss to the Irish Exchequer being estimated at €94 million.

Movendi International quotes the Irish Times in reporting that one shop near the border in NI put at 30-40% the growth in alcohol sales since MUP was implemented here. Bulk buys of alcohol in shops there can be anything between €200 to €3,000 or €4,000.

But one supermarket on the border in Donegal reported that while its overall sales had increased, alcohol sales had decreased by 13%.

Reactions to MUP

The Irish Convenience Store and Newsagents Association reports that cross-border issues are seen about 40km from the border mainly and then have a ripple effect, states the early review.

Off-licences supported the introduction of MUP as supermarket alcohol sales had threatened their business by selling alcohol at a loss.

But the Irish Times reports the National Off-Licence Association as stating that off-licences have not seen a significant effect so far from MUP.

Convenience stores also report no change in alcohol sales. However, there are no spikes in sales on bank holidays any more since they cannot run large discount bargains for alcohol products.

Many supermarkets are also noting no difference in alcohol sales, saying people are just willing to pay more for the same products now, reports the Irish Times.

Craft brewers also report a minimal effect or even a positive effect on their sales. They believe that MUP has levelled the playing field for them since they cannot compete with large multinationals. So as people shift to more expensive alcohol products they’re trying out more of the craft brands.

Slabs of beer are now almost non-existent since no one would spend on it, notes Damien O’Reilly, a Senior Lecturer in Retail Management in TU Dublin in the piece. Instead, there are smaller packs, with people buying four or eight packs. The volume in beer cans has also changed. 500 ml cans have been downsized to 440ml

Movendi International adds, “While it is far too soon to analyse the results of MUP in Ireland, nearby Scotland implemented the policy in 2018. Scotland’s MUP policy has proven to be effective. A study published in The Lancet found that since MUP household alcohol purchases in Scotland have reduced by 7.7%. According to the study the reductions in purchases were largely from households that bought the most alcohol”.

But a second study by Public Health Scotland, published this June, found that those who suffered the most from alcohol problems had not changed their habits since MUP was implemented.

However, MUP was designed to reduce population-level alcohol use and not tackle alcohol dependence, explained Sheila Gilheany, Chief Executive of Alcohol Action Ireland.

“MUP is designed to help reduce sales and use across the whole of the drinking population particularly those who have a pattern of drinking use consistent with hazardous and harmful use,” she told The Irish Times.

 

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