Sunday, May 18, 2008

Sunday dollars+sense: Tax alcopops. To extinction.

What is it about prices that the Coalition doesn’t understand?

Push up the price of something and people usually buy less of it than they would have had its price remained low.

Especially when those people are young, and so not yet addicted to it and short on cash.

Alcopops look and taste like soft drinks. They are brightly-coloured, in small bottles – attractive to children. Their sweetness masks the taste of their alcohol.

Young people don’t like the taste of alcohol. (It is acquired later, just as is the taste for chilies.)

But give a teenager a few red or green strawberry or melon flavoured alcopops and he or she will gradually get used to alcohol and want more of it...

Alcopops are starter drinks for kids.

Medical research suggests that the longer the consumption of alcohol can be delayed the better. It acts as a as neurotoxin for children and adults below the age of 25. Their brains are not fully-developed.

Disturbingly, the sales of alcopop starter drinks are soaring. That’s good news for the manufacturers, but bad news for the brains of young people.

The Treasury believes that its proposed tax hike will slow down the growth in sales by 43 million bottles.

The Opposition has pretended not to hear. It has latched on to another part of the Treasury analysis that says the sales of alcopos will continue to climb even after the tax increase.

They will, but by less than they would have. What part of that doesn’t the Opposition understand?

Or perhaps it does understand. In his Budget in Reply speech on Thursday night the Opposition Leader Brendan Nelson put forward the apparently contradictory position that the tax hike would be so effective that it would turn young people away from alcopops toward cheaper forms of alcohol and drugs.

For people used to alcohol there will indeed be substitution to cheaper forms of it. (The drugs suggestion was a bit of a stretch.)

But for young people not yet enticed onto alcohol early by easy-to-drink alcopops the price increase will help. It will make the take-up of alcohol more difficult.

The Opposition also seems confused by the proposition that a tax hike on something could both raise money and turn young people away from it.

Have they not been paying attention to what’s happened to smoking?

The tax hike will raise money from people already addicted, while dissuading potential addicts from trying it out.


3 comments:

cyclosarin said...

Sorry but there is two things mucking up your reasoning.

1: 75% or RTD's sold are dark spirit based, not alcopops, but rum and coke, bourbon and coke or scotch and dry, which never taste fruity no matter how weak you make it. These are primarily bought by over 25 year old males, not 17 year old females.

Over 25 year old males are no longer poor, so the price rise will not make them drink less, if they are out to binge drink, they will continue buying them until they are drunk, regardless.


2: You are wrong on the substitution, I am an accountant, but I also work in a bar on weekends, and I can tell you there are two things young women drink, alcopops and those Pink/Yellow Champagnes that Hockey held up.

They sell very well, and they are popular because they are sweeter than ordinary champagne or chardonnay.

David said...

Cyclosarin,

Your 75% stat may well be correct, but the reason people drink the RTDs is because they are easy to transport etc and are cheaper than buying postmixed spirits due to the tax anomaly; increasing the price may hit over 25 males, but the tax receipts will be what they should be, not an artificially low amount because the spirits come in a can rather than having to be mixed.

The substitution issue is more difficult to assess. You are right about the yello and pink champers being big sellers but people don't start drinking these drinks - they move onto them from the RTDs. I suspect that alcohol companies will come out with more wine based RTDs to counter the downturn from spirit based RTDs. This will appeal to girls but not guys and most (but not all) of the antisocial behaviioour I observe is among young males. I also expect an increase in cider sales relative to spirits due to the tax differences.

Overall, I think Peter is pretty close to the mark in his analysis.

onimod said...

Ok cyclosarin; we'll sort the alcopos out this time and get stuck in to the bimbo champagne next time - happy?
If they move on to something else than we'll get on to that too...
Why is bourbon and coke known as 'fight-in-a-can' eh?
Open your closed little mind to the damage alcohol does to people.
Your post suggests that there's no problem and that we should carry on as usual - is that what you're suggesting?
Don't align yourself with the liberal party right now - they're universally recognised as the high-school twat's club. Wait a generation till they get their $hit sorted out and think for yourself for a while.

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