'Real cost' of alcohol halved since mid-1990s, study finds

COMPLAINING ABOUT the price of drink has been a favourite Irish pastime for years. But a study carried out for the European Commission shows that the “real cost” of alcohol in Ireland has dropped 50 per cent since the mid-1990s as incomes rose and excise duties declined in real terms.

The growing affordability of alcohol has encouraged people to drink more, to the extent that overall alcohol consumption grew faster in Ireland than anywhere else in Europe between 1986 and 2003, the study for the commission’s health directorate shows.

In most other parts of Europe, consumption fell during the period. The biggest increase in affordability – a composite measure of the price of drink and a person’s income – was experienced by young people.

The study also found that the practice of cross-border alcohol shopping has negative implications for the “importing” country. Cross-border purchases not only reduce the tax revenue to be collected, they also lead to a rise in overall consumption.

Alcohol escaped a rise in duty in this week’s Budget, to the relief of the drinks industry. Minister for Finance Brian Lenihan said there was no scope for an excise increase because this would encourage shoppers to buy drink across the Border.

Expressing its disappointment at the Minister’s decision, Alcohol Action Ireland pointed out that there have been just three increases in excise duty in the past 15 years. The duty on beer hasn’t risen since 1994. A 10 cent increase on alcohol would raise €144 million for the exchequer, it pointed out.

The EU study shows that Ireland has the second-highest excise duty rates on alcohol in Europe, but the real value of duty on beer and wine has fallen steeply since 1996.

Rosemary Garth, director of the Alcohol Beverage Federation of Ireland, however, questioned the claimed link between increased affordability of alcohol and the popularity of drink.

Consumption in Ireland had fallen since 2001, even while incomes were still rising, she said.

The report also tracks the rise of the off-licence trade in Ireland, from 19 per cent of the market in 1991 to more than 35 per cent in 2006. It notes that on-trade prices are about twice those in off-licences and suggests the rise in off-licence trade is driven by lower prices.

In Ireland, consumption of wine grew almost four-fold between 1985 and 2003, from 0.55 litres of pure alcohol per person to 2.12 litres. Consumption of beer also grew, from 7.74 litres to 8.95 litres, while consumption of spirits fell slightly.

The report says alcohol is the third leading risk factor for death and disability in Europe, behind tobacco and high blood pressure. Europe has the highest proportion of drinkers and the highest levels of alcohol consumption per head in the world. The cost of alcohol misuse in the EU is estimated at about €125 billion, equivalent to 1.3 per cent of gross domestic product, a figure that dwarfs the €9 billion contribution the alcohol industry makes to the EU economy.

Increased alcohol consumption results in more liver cirrhosis cases, traffic injuries and traffic deaths, it says. However, no causal link was established between consumption and murder rates.