If, in England I can buy a can of beer for 80p in a corner shop or 50p in a supermarket – I get that. Suppliers deals, savings at sale. The corner shop pays a bit more earns a bit more to cover the costs of running the shop.
If the same can wil soon cost £1.30 as a minimum in Scotland. Who gets the profit?
If it’s all tax how does that work?
Do the alcohol companies just massively put their prices up to the retailers and make huge returns?
Do corner shops charge more than minimum or do they pay less tax?
How does it work?
In: Economics
Retailers and distributors will make more money off of the extra cost.
This is minimum pricing and not taxation.
I am familiar with minimum alcohol pricing but not particularly in Scotland. The 50p beer in the supermarket is not just because of the economy of scale. The supermarket may actually lose money on the beer can. They do this because when you go to the supermarket for cheap beer you also end up buying crisps, ready meals, candy, etc. which can have huge markups. So the Scottish supermarkets may not have much of a markup on the beer at all.
But the general concept of minimum alcohol pricing is that it will force either the shops, distributor or the brewery to increase their margins. The ratio depends on the deals negotiated between them. But more premium beer will be more expensive to produce and still cost the same in the shops, so it have less margins. When people are faced with the option of either getting cheap beer or premium beer at the same price they tend to go for the premium beer. So in general minimum alcohol pricing tends to increase the cost of manufacturing the beer in the first place. A lot of this cost is in the extra labor required both in the breweries and the farms.
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