When the notion of minimum unit pricing (MUP) was first introduced, I remember thinking “this is big!” and I wondered how the industry would react. I also wondered how I would react if the same were to be implemented in England; would it make a difference to how or what alcohol I buy? Would I even notice the price rises?
In May 2018, the Scottish Government implemented legislation for the minimum pricing of alcohol which meant that a single unit of alcohol could not be sold for less than 50p. Now, 10 months on, with the legislation fully embedded, let’s take a look at how Scottish shoppers have reacted and what, if anything, has changed.
The vast majority of Scottish shoppers, 94%, are aware of minimum unit pricing; however, 19% of shoppers were unaware that the MUP legislation covers all alcoholic drinks. There clearly remains some confusion amongst shoppers as to what exactly the legislation actually applies to within the alcoholic beverages category.
The impact of the 50p tax affected categories within the off trade, and the brands within them, very differently. For example, we saw limited pricing impact to the overall wine category, whereas the lager, cider and spirits categories saw the most disruption in price. Own label products also suffered as their price point became much more in line with their branded counterparts. So for those 6% of Scottish shoppers who say they were not aware of the new legislation, it may be simply down to the fact that the products they bought before and now post MUP, simply weren’t affected very much.
So, how do Scottish shoppers feel about the legislation? Only half of shoppers agree that it was right to introduce the legislation. In general, millennials are more positive about MUP likely because they are known to consume alcohol in moderation and also are known to experiment with premium options in the off trade. We see spend per buyer on the rise for millenials, as units per buyer fall. The price rises may not have affected their spend as much as it has for the 55yrs+, who are less positive overall about the legislation.
Even though only half agree with MUP, it is interesting that we have seen an opinion shift in favour of raising the 50p threshold. For example, 3 in 10 shoppers now believe MUP should be raised from 50p to somewhere up to the £1.00 mark, this is up from 1 in 10 shoppers pre-MUP. And it’s the millennials who are much more supportive of the rise than the 55yrs+.
When we asked shoppers how they have been managing their alcohol spend post MUP they told us they have adopted various tactics: saving in other areas of their household shopping, buying from off trade stores outside of Scotland, and drinking out more in the on trade as they believe the price gap is closing.
The effect on the off trade category is that value is up (+8%), no surprise as overall prices have risen, but volume is almost flat as Scottish shoppers bought less in the off trade. However, Scottish shoppers are becoming increasingly savvy when it comes to buying alcohol, shifting their spend to more premium products or indeed mixing up their current repertoire. Around one in five shoppers claim to have bought more premium brands as they believed them to be more affordable when compared to cheaper brands.
Minimum unit pricing is here to stay in Scotland, and to succeed alcohol manufacturers should continue to offer greater choice to shoppers with brands across various price points and abv levels to ensure the range in the off trade in Scotland is optimised to cater for changing behaviour. We know not all shoppers are created equal, however we can take many learnings from the evolving behaviour of the Scottish shopper to help with planning for MUP in Wales later this year, is your range ready for the next big change in our industry?
Originally published in Drinks Retailing News