Minimum unit pricing: What will it mean for wine, beer, and spirits in Scotland?

14-Nov-2016 - Last updated on 14-Nov-2016 at 11:59 GMT

pic: iStock/Duncan_Andison

Spirits will face the greatest impact from Scotland’s impending minimum unit price legislation, with 69% of volume currently sold being below the 50p per unit threshold. But wine and premium brands could benefit from the legislation.

Last month Scotland’s Court of Session approved the government’s 2012 plans for a minimum unit price of 50p per unit, knocking back a legal challenge led by the Scotch Whisky Association.

At least half of alcoholic beverages currently sold in Scotland will not meet impending minimum price legislation, according to Nielsen.

Blended scotch will require a 20% price rise to meet the threshold; while vodka will need a 16.3% rise.

In beer, 67% of volume is currently below the threshold, while 51% of cider products will be affected.

However, wine could take advantage of minimum unit pricing, with only 3.5% of wine sales impacted.

Could revenue for spirits actually increase?

If products are considered according to the top 50 selling products in each category (instead of total volume sales) then 76% of the most popular spirits don’t meet minimum pricing compared to 74% in beer, 54% in cider and 12% in wine, according to Nielsen’s research.

Wine, therefore, will be least impacted by minimum unit pricing and thus has the most to gain, said Marika Praticó, senior client manager at Nielsen. “Overall, wine will need to raise prices by the least amount, thus, it becomes more affordable relative to other alcohol.”

But spirits businesses could actually see increased revenue from the enforced price rise – as long as demand doesn’t fall beyond the ‘tipping point’. If demand falls by more than 12.5%, then revenues will start to decline. Before this point, the industry will benefit thanks to the higher price point.

Meanwhile, premium spirits (and indeed other premium alcoholic beverages) will benefit as the price difference between them and cheaper brands narrows. This will encourage people to trade up: good news for premium brands, but bad news for supermarkets’ own-label offers.

England and Ireland could become the new Calais for Scottish shoppers as they search for cheaper booze: “there could well be an increase in cross-border alcohol shopping among the Scottish, mirroring what many Britons already do with the annual Calais run.”

And this Christmas could be a ‘bumper season’ for alcohol retailers, as people stockpile alcohol ahead of legislation coming into force.

Nielsen analysed till sales (EPOS data) in nearly 1,200 stores in Scotland.