Minimum Pricing

Minimum pricing is the theory that increasing the price of a commodity will reduce its consumption. It also presumes (in the case of alcohol) that there's a problem to be solved (consumption is increasing,) and that minimum pricing is the answer to that problem (by decreasing consumption.) The real problem here is that alcohol consumption in the UK isn't increasing by anything like that which we are lead to believe - it's actually decreasing.

For example, the UK government has proposed to bring in a minimum price of 40 pence per (UK) unit in an effort to make binge drinking and preloading more expensive and reduce the amount of binge drinking and preloading.

The theory presumes that the commodity being priced in such a way exhibits elasticity and that the particular brands affected are the ones being consumed.

Unfortunately the commodities suggested to be subjected to minimum pricing are fairly in-elastic, in that increasing the price will not affect the demand, and the brands affected are typically far sub-premium that and aren't the ones typically being bought.

Of course, once minimum pricing is enacted, there's the fact that once it is noticed that it's not having 'the desired effect,' (see elasticity above,) there will be calls for the minimum price to increase.

UK Government - Alcohol

As noted above, the UK Government has proposed that there be a 40p minimum price per alcoholic unit. We will ignore, here, the fact that the unit is a completely arbitrary measure of alcohol and not only differs in how much alcohol it represents from country to country, but different countries have different ideas on how much alcohol is the 'recommended daily/weekly intake.'

Asda are currently selling 8x275ml Smirnoff Ice (5%) for £7.50. That's 2.2l x 5 = 11 UK units. Or 68.18p per unit. Tescos are currently selling 3x12X284ml Stella (5%) for £22.00. That's 10.224l x5 = 51.12 units. Or 43.04p per unit.

Proponents for minimum pricing claim that this is intended to target the 'cheaper' brands, and won't affect the more expensive brands (such as Smirnoff Ice or Stella,) but if the cheaper brands are pushed close to the same price point as the premium brands, the premium brands must put their prices up to preserve the 'air of premiumness' they currently enjoy.

Scottish Government - Alcohol

The Scottish Government have proposed a 50p minimum price per unit.