At least 50% of alcohol sold in Scotland doesn’t meet the impending minimum price legislation according to Nielsen which analysed EPOS tills from nearly 1,200 stores in Scotland.
Spirits will be the most impacted as 69% of total spirits sales volume is currently sold below the 50 pence per unit threshold. Beer is the next most impacted (67% of volume is below the threshold) followed by cider (51%) while only 3.5% of wine sales would be impacted.
The Nielsen report also points out that when looking at the top 50 best-selling products in each category by value, 76% of the most popular spirits don’t meet minimum pricing; neither does 74% of the beer beer products in this segment, nor 54% in the cider category. But for wine, this percentage is just 12%.
“Wine is by far the least impacted and so has the most to gain from minimum pricing,” says Marika Praticó, Nielsen’s Senior Client Manager, “Overall, wine will need to raise prices by the least amount, thus, it becomes more affordable relative to other alcohol.”
Blended scotch and vodka are the two categories impacted most by minimum pricing legislation. Blended scotch, overall, will require prices to rise 20% to meet the threshold, whilst vodka requires a 16.3% rise.
Marika Praticó notes that enforced price rises aren’t necessarily bad for the spirits industry; in fact it could result in increased revenue as long as demand doesn’t fall beyond a certain “tipping point” she explains.
As long as any potential decline in demand doesn’t exceed 12.5% the industry will benefit thanks to the higher price point.
“Should demand fall by more than 12.5%, that’s when their revenues will decline.”
Nielsen’s analysis also raises four potential implications of minimum pricing legislation on retail behaviour.
As with wine, premium brands – particularly in spirits – are likely to benefit as the price differential between them and cheaper brands diminishes, “so it’s a good time for people to ‘trade-up’ to the more expensive brands, which is likely to have a negative impact on supermarkets’ own-label offerings,” she believes.
She also expects a “near extinction” of major price-saving deals offered by retailers in spirits, beer and cider as most would potentially take the price paid for each unit of alcohol below the threshold.
There could well be an increase in cross-border alcohol shopping among the Scots to England and Ireland, too, where prices would be cheaper “mirroring what many Britons already do with the annual Calais run”.
She points out that there’ll also be the “inevitable stockpiling” of alcohol before the legislation comes into force which could well mean “a bumper Christmas for alcohol retailers.”