Minimum unit pricing yields clear winners and losers in Scotland

Minimum unit pricing has delivered a hammer blow to white cider in Scotland as sales have fallen off a cliff since it was introduced on May 1, 2018.

IRI data for the 40 subsequent weeks to February 2019 shows value white cider down 73.3% and value amber cider down 54% year on year.

Own-label products have also collapsed amid a drastic shift in the market, but there are several big winners too.

In the 12 weeks to February, ale sales rose 8.3% in volume and 15.2% in value in Scotland, compared to growth of 1% and 2.3% respectively in the rest of the UK.

Premium cider is also enjoying 9.4% growth and craft cider is up 22% in Scotland, while mainstream brands such as Strongbow and Magners are growing, along with world beer and mainstream lager. 

Buckfast sales are surging as the tonic wine did not suffer any price rises, while it is interesting to note that K cider at 8% abv and Scrumpy Jack at 6% abv have also benefited from increased sales as Scottish shoppers look for alternatives to the high-strength ciders they had previously been drinking.

Wales is poised to introduce a 50p MUP this year and England could follow suit, so producers and retailers are watching developments in Scotland closely.  

Darryl Hinksman, head of business development at Westons, said: “Value white cider is effectively dead. MUP has premiumised the category and taken units out of the Scottish cider market. It is killing off this bottom end. We think it’s a good thing.”

In the 12 weeks to February, total beer and cider volume was down 3.2% in Scotland, while volume sales were up 1.3% in the rest of the UK. However, value sales have risen by 11.3% in Scotland, versus 3.2% in the rest of the UK. That is because the average price per litre has risen 56p in Scotland.

Mumtaz Ali, owner of Mace convenience store in Edinburgh, told DRN: “My sales are up 20% since MUP was introduced in Scotland. I am now seeing good sales of multipacks of beer and cider, so eight, 10 and 12-packs and some bigger ones. We can now sell these at the same price as a supermarket can and we get a good margin on them too. I will definitely add more of those in the near future.

“Before MUP I was a bit too frightened to stock those, when I had them at £11 a pack and supermarkets had them at £8. I am sure the independent sector for alcohol is up in general since MUP. It’s very encouraging. Even in spirits I can now sell the cheapest vodka in my store at the same price as you would find in a supermarket. It doesn’t seem to have put people off buying alcohol but I don’t think there has been a negative effect either. It gives us a better margin.”

DRN columnist Gemma Cooper, commercial business partner at Nielsen, reports that total BWS volume sales are flat in Scotland, while value sales have grown 8% since MUP was introduced. 

That suggests MUP is not achieving its actual aim – to reduce alcohol consumption in Scotland – and instead is simply skewering the market in different directions.

“Scottish shoppers are becoming increasingly savvy when it comes to buying alcohol, shifting their spend to more premium products or indeed mixing up their current repertoire,” said Cooper. “Around one in five shoppers claim to have bought more premium brands as they believed them to be more affordable when compared to cheaper brands.” 

Ali added: “It doesn’t seem to have put people off buying alcohol but I don’t think there has been a negative effect either. It gives us a better margin. I would say shoppers were quick to realise the prices would be the same everywhere and that has driven them into the convenience sector. They don’t want to queue for ages in a supermarket, they just want to buy something quickly.”

Another DRN columnist, industry commentator Paul Chase, called MUP a bad idea that is proliferating like a virus and highlighted that volume sales actually grew 3.8% in Scotland last summer after MUP was introduced (IRI, April 20-October 13).

“It’s worth remembering the predictions made by researchers at Sheffield University – whose modelling underpins the political support for this policy – that unit consumption per head would fall by 3.5%, and by 7% for harmful drinkers,” he said. “The only argument MUP’s supporters make in response is that while sales and consumption may have risen in Scotland, they’re not rising as much as in England where we don’t have MUP. But then, consumption in Scotland was at a higher level to start with. In my view if the only way you can score goals is by moving the goalposts you’re in the wrong game.”

He also laughed off suggestions that last summer’s sales were up because Scottish drinkers were keen to cheer on England in the World Cup.

“But a big change in regulation creates new winners and losers,” he added. “The big loser is own-label. This has collapsed in every category or been withdrawn as it now has no place in the pricing hierarchies. 

“Many of these were lower-strength products bought by low-income consumers – which demonstrates the regressiveness of this pricing reform. It always was about pricing alcohol out of reach of the poor even though the locus of alcohol abuse is among the moneyed middle classes.

“In the short term supermarkets have lost volume sales and c-stores have picked them up as the price differential narrows. I don’t expect to see this continue because supermarkets will find a way of fighting back.”

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