By Andrew Starke

With the Federal Government planning to set a floor price for alcohol, Winemakers' Federation of Australia (WFA) chief executive, Stephen Strachan, explains why research suggests this is a mistake.

“The speed with which the idea gained publicity and traction last week reinforces our concern that despite countless hours of research into the social problems linked to alcohol the only answer that ever emerges is to make it more expensive.

Research shows price isn’t a disincentive because heavy drinkers have an inelastic demand for alcohol.

They will keep buying it – using even more of their income to do so – while the great majority of moderate drinkers will either be unfairly forced to pay more or will do without.

Minimum pricing may not technically be a tax, but it would have the same impact on the wine industry and consumers without solving the problem that motivated it.

The great myth of wine casks is that they are only drunk by hardened drinkers and the young, when the opposite is in fact true.

Research WFA commissioned from Wine Intelligence shows that nearly half of those who buy four-litre casks and 38% who buy two-litre casks are aged over 55 and around 40% earn less than $50,000 a year.

And the majority only have 1-2 glasses at a sitting – well within the recommended guidelines.

In other words, pensioners buy casks for their nightly glass with dinner because they are convenient and affordable.

There are clearly issues with indigenous abuse of cask wine in the Northern Territory, but as with all such problems targeted initiatives rather than hopeful broad-brush solutions are needed.

While acknowledging that this issue was raised in a rather ad hoc manner this week, it is still disappointing that no mention was made of the fact that winemakers already are collaborating with NT authorities to directly confront the abuse of cask wine, not by artificially increasing the price but by restricting its availability.

Four-litre casks are now banned throughout the NT, there are various restrictions on two-litre casks and all casks are banned in a number of communities.”

The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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  1. Its about time this rediculously neive Federal Govt woke up to the fact that the Wine lobby have been hiding behind their “holier than Thou” chirade, and have laid the blame for a significant part of alcohol abuse at the end of the market which is the cheapest (one twelfth of the tax per litre of alch of RTDs), and easiest to access.
    RTDs coped the blame 3 years ago, and now the true culprit is being shown for what it is.
    Wine casks benefit noone – grower, marketer, trade, consumer or Govt.
    They are a blight on the whole industry.

  2. Cask wine has a bad reputation because it’s the drink of choice for homeless alcoholics. They drink it for its affordability. Guess what? Methylated Spirits is pretty cheap.

    A floor price on liquor doesn’t treat alcoholics. What it does do is increase the risk that they will find more dangerous ways of getting inebriated. It’s along the lines of drug policy. Remove the substance and you’ll remove the problem. How long will it take society to realise that that doesn’t work.

    The WFA shouldn’t focus on the determent to the wine industry. They should focus on the fact that this won’t stop problem drinkers, drinking.

  3. What we need is a voluntary floor price for wine. If the winemakers refuse to pass on the increased price to growers, they would have to pay it to the government as tax. This would fix a lot of the problems of inequity in the industry and increase the quality of grapes and wine.

  4. What has taken you so long in reaching this conclusion has been available to the wine industry for a decade or more. This industry generated myth was perpetuated by the wine journalists. it was most recently reported by Mueller et all in the ANZWIJ.

    The issue of availability is the key but in itself will become an issue as unscrupulous bootleggers and black marketeers move to capitalise.

    If fact as alcohol disease increased during prohibition in the US due to : bad alcohol production practices”.

    It is a complex issue but my research did not suggest that cask drinkers where abusive consumers – but there are lot consumers across all socio -economic groupings, with a polarisation towards older age groups.

  5. Once again we see the WFA arguing from a generalised premise. If the price of cask wine (2lt or 4lt) is increased it will affect all drinkers of such product, agreed. Socially the people who cannot afford it will stop drinking so much, which will confirm elasticity of demand, whereas the inelastic consumers will continue at increased cost to their self and family and community. They will be then identified and we, the rest of society, can help them to deal with their inelastic demand for alcohol. Until such an action is followed through properly, we, including WFA members, are acting irresponsibly toward our fellow man.
    Please let us see the WFA support a system of pricing and observation which helps our people, not simply sustains the profits of winemakers and sellers. Will the sales volumes into the over 55 years age and less than $50000 income demographic of Australia be diminished by a price increase? If 4 litres increased by $10.00 that will equate to about 30 cents per glass for the two glasses per night example given by WFA. Is this given data the postion of all WFA members? Maybe we have a bigger social issue than is being reported?
    The floor price should not be exclusive to cask packaged wine but all alcohol: RSA applies to all people in the alcohol provision chain not only the final point of sale customer service person.

  6. The Federal Government is shooting itself in the foot on this one. Most consumers use cask wine to reduce the amount they drink at a sitting. A cask means that you can have one or two glasses with a meal and then stop. You don’t have to finish off a bottle to stop it going off. Because a cask stores well it also means you can buy it with the groceries and have a quiet drink at home without having to drive. Itv is Labours inner city supporters who want to make wine an expensive, elite drink.

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