The Importance of Compliance with Alcohol Regulations

Healthy Alcohol Marketplace

By Pamela Erickson

September 23, 2016

There is an error in the September newsletter, so we are providing a corrected copy. Much thanks to Mary Sloan, Prevention Supervisor in Spencer, Iowa for catching the error and notifying us. We really appreciate it. Despite the fact that we review the final version several times, we sometimes don’t catch an error. Please feel free to reply to our email if you see an obvious error or find something hard to understand. We like feedback!

Here is a link to the corrected copy:  http://healthyalcoholmarket.com/pdf/NewsletterSeptember2016.pdf

The error was made regarding whether a tax increase is likely to increase the retail price. (We said decrease when we meant increase!)

Some additional comments are warranted. We never know exactly what will happen to prices when a tax on a product is increased. We usually assume the retailer will try to pass the tax increase on to the consumer by raising prices. But, that doesn’t necessarily happen. Especially in states where large supermarkets are permitted to sell all forms of alcohol, they could keep prices for alcohol the same and raise prices on other products to make up the difference. Supermarkets like to use alcohol as a loss leader or as an advertised special to draw in customers. Therefore, they may want to keep prices low.

In some states wine and spirits can only be sold in small liquor stores. In those instances the price may be more likely to increase, because the liquor stores have few other products for sale and may be more likely to pass on the tax to the consumer. That is why we need more than one way to keep prices from hitting rock bottom and pushing up consumption. Many states prohibit “sale below cost” and others require the wholesaler to sell all products at the same price to all, thus decreasing the incentive to lower prices. Some states also prohibit coupons and volume purchase promotions in order to prevent lower prices from increasing consumption.

For more information, see www.healthyalcoholmarket.com or Contact Pam Erickson at pam@pamaction.com