Supermarket tills would be ringing to the tune of an extra GBP700m (US$1.1bn) if a minimum price on alcoholic drinks were to be introduced in the UK, the Institute of Fiscal Studies has said.

Tesco, Asda-WalMart, Sainsbury’s and Morrisons, the four largest supermarket chains in the UK, would be the main beneficiaries of minimum pricing. Drinks producers would also stand to increase margins, said the Institute of Fiscal Studies (IFS) in a report published this week.    

It said that retailers and drinks manufacturers would gain an extra GBP700m if a minimum price of GBP0.45 per alcohol unit were introduced on drinks. Tesco’s CEO, Sir Terry Leahy, declared his support for minimum pricing earlier this year, as a means of tackling excess drinking in the UK.

At the same time, poorer households in the UK would be hit hardest by minimum pricing, making it a more regressive policy than affecting alcohol pricing via taxation, according to the IFS. Its report comes as the UK Coalition Government is nearing the end of a review of alcohol pricing and taxation, as well as licensing laws.

However, the chances of minimum pricing being introduced look slim. A GBP0.45 base price was last month voted down in the Scottish Parliament, while the Coalition Government has distanced itself from the policy in England and Wales.

The IFS concluded: “In the long-term, it would be desirable to restructure alcohol taxes so that they were based on
alcohol strength, thus allowing the tax system to mimic the impact of a minimum price but ensuring the additional revenues went to the Government rather than firms.”

For the full study, click here.

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