THE VALUE OF ALCOHOL REGULATION IN TODAY’S CLIMATE

Pamela S. Erickson

President/CEO

Public Action Management

State Regulatory Meeting, July 30, 2012

Silver Spring, Maryland

www.healthyalcoholmarket.com

IMPORTANCE OF EFFECTIVE ALCOHOL REGULATION FOR PUBLIC HEALTH AND SAFETY

CDC estimates 79,000 deaths occur annually due to alcohol. Contrast with 6,000 people lost in two recent wars.

In 2010, 10,228 people died and 345,000 were injured in drunk driving crashes.

Underage drinking robs youth potential. In Maryland, 17% of youth report binge drinking.

Once addiction sets in, it is difficult and expensive to treat.

BUT WITHOUT EFFECTIVE REGULATION THINGS WOULD BE MUCH WORSE

BEFORE PROHIBITION…IT WAS A FREE...AND WILD…MARKET!

Alcohol sold in numerous “Tied House” saloons owned by large, out of state manufacturers. Price wars resulted in cheap alcohol.

Aggressive sales promoted high volume drinking.

Social problems: public disorder, intoxication and addiction, family wages squandered, prostitution, gambling.

BUT AREN’T PEOPLE SMARTER TODAY? DO WE REALLY NEED ALL THAT REGULATION?

Just look at the United Kingdom where deregulation has fostered an alcohol epidemic.

Underage drinking rates are twice ours; hospitalization and disease due to alcohol have doubled in just 10 years.

Today alcohol is available in bars, clubs and grocery stores 24 hours a day, 7 days a week.

The market is dominated by 4 large grocery chains that aggressively promote cheap alcohol.

INEFFECTIVE REGULATION IN RUSSIA IS KILLING MEN

Officials estimate that 500,000 Russians die annually due to alcohol.

Alcohol has cut the life expectancy for males to about 60 versus 72 for women.

One in three males die before retiring.

A US EXAMPLE OF DEREGULATION: WASHINGTON STATE

Costco re-wrote 60 pages of state alcohol laws and gave $22 million to a campaign to pass a ballot measure in November 2011 to privatize spirits and deregulate wine.

The re-written statutes have increased availability of spirits from 328 state stores to over 1,500 outlets (and more are likely)

Private system started June 1 and no one seems happy! Simplistic ideas dealing with complex problems rarely work.

WE NEED EFFECTIVE REGULATION TO REDUCE ALCOHOL HARM

THE FACT IS THAT SOME COMMON BUSINESS PRACTICES CAN CREATE PROBLEMS WHEN SELLING ALCOHOL

Marketing to frequent customers…for alcohol…includes underage youth, heavy drinkers and alcoholics. (Estimates of underage market are 11-18%; 5-20% drink heavily or above recommended levels.)

Heavily promoted sales incentives—such as loss leaders and volume discounts-- encourage heavy consumption.

Marketing to new generations of buyers means marketing to underage youth

OUR GREATEST PROTECTION IS AN EFFECTIVE ALCOHOL CONTROL SYSTEM WHICH ADDRESSES THE ABC’S OF REGULATION:

Availability. Allows alcohol to be sold by the bottle and the drink, but limits the number, location, types of alcohol products, and hours of outlets.

No “Bargain Booze”. Regulations balance prices, control price competition, and restrict dangerous marketing and promotional practices.

Children and Teens. Age restrictions protect young people from the serious problems of underage drinking.

Drunk driving. Creates and enforces strict measures against drinking and driving—sobriety checks, blood alcohol limits, driver’s license suspension.

Education and Enforcement. Uses the carrot of education (alcohol awareness programs, “schools” for offenders) and the stick of enforcement (fines, community service and jail) when education fails.

Source: Adapted from World Health Organization recommendations.

REGULATORY SYSTEM BENEFIT: KEEP PRICES FROM INCREASING CONSUMPTION

Prices set high enough to keep consumption low, but not too high to induce bootlegging.

Uniform price requirements maintain fairness and reduce opportunity for cutthroat competition.

Lack of promotions and incentives to buy and drink in high volume.

“…increasing the price of alcohol will result in significant reductions in many of the undesirable outcomes associated with drinking.”

Alexander C. Wagenaar, PhD, University of Florida College of Medicine.

REGULATORY SYSTEM BENEFIT: REDUCE AVAILABILITY BY LIMITING OUTLETS AND DAYS/HOURS OF SALE

CDC’s Task Force on Community Preventive Services recommends limits on alcohol outlet density “on the basis of sufficient evidence of a positive association between outlet density and excessive alcohol consumption and related harms.”

Task Force also recommends maintaining limits on days and hours of sale.  

• More outlets: • Increase heavy and

frequent drinking. • Increase violence

and assaults.• Increase underage

drinking.• Strain enforcement

resources.

REGULATORY SYSTEM BENEFIT: CONTROL OR BAN ON DANGEROUS PRODUCTS

Several states ban alcohol energy drinks.

Some also ban very high proof products (190) or have special purchase procedures.

Many states require higher alcohol content products to be sold only in liquor stores.

REGULATORY SYSTEM BENEFIT: REDUCE ADS AND PROMOTIONS THAT TARGET YOUTH OR ENCOURAGE HEAVY DRINKING

Advertising rules

Wholesale uniform prices

Bans on volume discounts and coupons

Happy hour rules

Limits on drink “specials”

REGULATORY SYSTEM BENEFIT: PROVIDE REVENUE TO OFFSET HIGH COST OF ALCOHOL ABUSE

Excise tax and sales taxes.

Tax collection done by wholesalers and saves money.

License fees.

Special event or extra-privilege fees.

REGULATORY SYSTEMS BALANCE CUSTOMER SERVICE AND PUBLIC SAFETY

Most Americans don’t drink or drink quite rarely. (CDC survey)

Only about 20% drink enough to be weekly customers.

Surveys show Americans are satisfied with the number of alcohol outlets.

87% of consumers said they are satisfied with the variety of alcohol offered in their communities. (Center for Alcohol Policy national survey)

DANGER AHEAD: HOLD ONTO YOUR REGULATORY HORSES!

Courts and other public officials sometimes don’t think our regulations work… or fail to understand the need for a system which uses multiple measures of control:

“The court found no “persuasive evidence that the purpose of any of the challenged restraints was to promote temperance by raising average beer and wine prices.” And, the state “could readily achieve that goal in a manner that does not run afoul of the Sherman Act. Most obviously the State could adopt higher excise taxes.” US District Court, Costco v. Hoen

POLICY-MAKERS ARE VULNERABLE TO ARGUMENTS THAT DEREGULATION CAN CREATE JOBS AND RAISE REVENUE Few policy-makers

understand or value many of our alcohol regulations.

Media makes fun of “antiquated” regulations or suggests we do not need a “nanny state.”

Poor quality “studies” claim deregulation will create hundreds of jobs and greatly increase government revenue.

National big box grocery chains want to sell all forms of alcohol with little or no regulation.

REGULATORY CATCH-UP: NEW PRODUCTS AND PROMOTIONAL TOOLS

ITS IMPORTANT TO EDUCATE PUBLIC OFFICIALS ABOUT THE EFFECTIVENESS OF ALCOHOL REGULATION BECAUSE THE COST OF GETTING IT WRONG IS HIGH

This isn’t Russia. Democracies require slow deliberation for wise decision-making. (In contrast, Russia solved problems with casinos in 2009 by closing all of them at one time.)

The UK has been attempting to “re-regulate” for many years…but problems fester as regulation remains weak while they deliberate.

Industry has considerable power while public health is often silent due to grant prohibitions on “lobbying”..

” It pays to be very careful when

considering deregulation as it will be difficult to revert back.

A FINAL MESSAGE: APPRECIATION FOR THE HARD WORK IN TODAY’S CLIMATE

RESOURCES ON REGULATION/DEREGULATION:

“2012 Issue Briefs for States, Brief Explanations of Common Regulatory Issues Facing State and Local Communities,” www.healthyalcoholmarket.com

“Alcohol Outlet Density and Public Health”, Alcohol Justice (formerly The Marin Institute): www.alcoholjustice.org

“Alcohol Policy Research & Alcoholic Beverage Control Systems: An Annotated Bibliography & Review,” NABCA, National Alcohol Beverage Control Association.

“Preventing Excessive Alcohol Consumption,” Guide to Community Preventive Services, www.thecommunityguide.org

“The Dangers of Alcohol Deregulation: The United Kingdom Experience: 2012 Update,” Pamela S. Erickson, www.healthyalcoholmarket.com

“The High Price of Cheap Alcohol,” Pamela S. Erickson, www.healthyalcoholmarket.com

Toward Liquor Control, Raymond B. Fosdick and Albert L. Scott, Center for Alcohol Policy, www.centerforalcoholpolicy.org

“What are the most effective and cost-effective interventions in alcohol control?” World Health Organization, February 2004

“Today’s alcohol demands a closer look,” National Alcohol Beverage Control Association, www.nabca.org.

FOR MORE INFORMATION: CONTACT PAMELA ERICKSON, PAM@PAMACTION.COM OR VISIT WEBSITE HEALTHYALCOHOLMARKET.COM.

Website Highlights:

Monthly newsletter, educational pieces, PowerPoint presentations from conferences. (These are free!)

Recent updated report on UK, “The Dangers of Alcohol Deregulation: the United Kingdom Experience, 2012 Update” can be downloaded from website.

Issue Briefs for 2012 has simple explanations of alcohol regulatory issues as well as citations for research and more information.