Minimum alcohol pricing – bloody arseholes – and I say that in a professional and personal capacity.

The pricing of alcohol at 40p a unit, given modern booze taxes (about £1.90 on a bottle of wine), amounts to a ban on loss leaders. In other words, it solves a coordination problem for supermarkets. This is one reasons Tesco supports minimum pricing; they no longer have to sacrifice margin to attract customers from Sainsbury’s etc.

So, what we have is a transfer of wealth from most people who drink, but especially from heavy and thrifty drinkers, to supermarkets’ bosses and shareholders. Interestingly, given supermarkets’ size and prominence, this means it is a transfer of wealth to people with private pensions which will tend to be at least somewhat invested in supermarket stock.

Three conclusions:

  1. This should stunt innovation at the bottom end of the booze market, so never expect to stumble upon a cheap but actually very nice drink again.
  2. Setting up a bureaucracy to enforce a minimum price is more costly financially and politically than increasing the price of that floor – so don’t expect the 40p limit to last long. Swedish beer prices here we come.
  3. More importantly, distributionally, this cannot but be a transfer from the very poorest people who have no pension to people on middle and higher incomes who do, however pitiful their provision.

Slow hand clap for the Tories – combining socialism for the rich; innovation stunting regulation and the shittiest part of Scandinavia since their post-war embrace of eugenics.