The introduction of minimum pricing in Scotland is, according to new research from Nielsen, set to increase the price of half of all products on sale in the country’s off-trade - something which could indirectly benefit the on-trade.
At least 50% of alcohol sold in Scotland doesn’t apparently meet the impending minimum price legislation of 50p per unit. Spirits will be the most impacted as 69% of volume currently sold is below the threshold. Beer is the second most affected category, with 67% of volume currently being sold at prices below the new minimum. Around 51% of cider products will be also be affected.
The company found, however, that only 3.5% of wine sales are currently made up of products being sold below the new minimum price.
Thirty eight of the top 50 selling products in spirits, 37 in beer, 27 in cider and 6 in wine currently don’t meet the guidelines, said Nielsen. Blended scotch and vodka are the two categories that will be impacted the most, with blended scotch requiring a price increase of 20%, whilst vodka requires a 16.3% rise.
Marika Praticò, senior client insight manager at Nielsen said that as long as demand doesn’t fall by 12.5%, increased prices could benefit the industry. 'Wine is, by far, the least impacted and so has the most to gain from minimum pricing,' Praticó said. 'Overall, wine will need to raise prices by the least amount, thus, it becomes more affordable relative to other alcohol.
'This break-even figure is 12.5%, as long as any potential decline in demand doesn’t exceed this 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.'