Big Alcohol‘s Global Playbook: New markets, reduced regulation and lower taxes

As the global alcohol industry becomes increasingly concentrated in a few big international companies, its practices around the world become remarkably similar. Public health professionals seeking to reduce the harm from alcohol can benefit from documenting and analyzing these trends and from studying the efficacy of differing responses. Several recent reports illustrate these convergences.

Developing New Markets

To expand, a company needs to develop new markets. In recent years, changing tastes in alcohol consumption, the global recession, and continuing competition from other multinationals as well as smaller national companies have created a fierce battle for recruiting new cohorts of drinkers.

Two attractive markets for the alcohol industry are youth drinkers, who promise to become lifetime customers, and women, who constitute the half of the world’s population that still drinks less.

In an article in the January issue of the American Journal of Public Health, James Mosher describes how Diageo, the world’s largest producer of distilled spirits, has used the Smirnoff brand of vodka to attract new youth drinkers. By developing alcopops, beverages that taste like soft drinks, including new fruit flavors, competing with beer makers to win over young drinkers, and engaging in active lobbying to win favorable regulatory rules for these new beverages, Diageo has seen its Smirnoff vodka sales take off.

In Canada and the United States, wine makers have targeted women, especially “Moms,” with new wine brands such as Mommy’s Time Out, MommyJuice and Girl’s Night Out. In an article in the Toronto Star last month, Ann Dowsett Johnston analyzed the growth of women-targeted alcohol advertising, examining  the new wine brands, alcopops, and the various vodka drinks produced for women. In an interview with the Star, CHW Contributing Writer David Jernigan, the executive director of the Center on Alcohol Marketing and Youth at Johns Hopkins University said, “In the past 25 years, there has been tremendous pressure on females to keep up with the guys. Now the industry’s right there to help them. They’ve got their very own beverages, tailored to women. They’ve got their own individualized, feminized drinking culture. I’m not sure that this was what Gloria Steinem had in mind.”

Influencing Governments, Coopting Regulations

Logo of Alcohol Concern, a UK advocacy group

Another strategy Big Alcohol uses to advance its business interests is to weaken and coopt government’s regulatory apparatus to better meet its needs. National leaders in business-friendly states are often eager to help. In New Zealand, for example, the government last month appointed Katherine Rich, CEO of the Food and Grocery Council, to the new Health Promotion Agency Establishment Board, an entity that replaces the Alcohol Advisory Council of New Zealand, the Health Sponsorship Council and some health promotion activities of the Ministry of Health. Professor Doug Sellman of Alcohol Action New Zealand observed that “Katherine Rich has been one of the most vociferous defenders of the alcohol industry’s desire to continue to pour as much alcohol into New Zealand society as it can. [She] has used her role as an industry spokesperson to attack community groups advocating a stronger Alcohol Reform Bill for the sake of the health of New Zealanders.”

In the United Kingdom, the Conservative government initiated the “Public Health Responsibility Deal for Alcohol,” an industry-public partnership that seeks to “foster a culture of responsible drinking.”  These Responsibility Deals develops voluntary industry pledges. According to a recent analysis in the Globe, the newsletter of the Global Alcohol Policy Alliance, “the critics of the pledges say they are not based on evidence of what works, and were largely written by Government and industry officials before the health community was invited to join the proceedings.” As a result, many health and advocacy organizations have refused to participate in the process.

Reducing Taxes

Another way that Big Alcohol companies maintain their profits is by finding ways to pay less tax. According to the global watchdog organization Tackle Tax Havens, SAB Miller, a leading global London-based brewing conglomerate, uses transfer pricing to avoid paying taxes in many countries. SAB Miller has 65 tax haven companies and its tax avoidance strategies are estimated to reduce the company’s global tax bill by as much as 20 percent, giving the company an advantage over local competitors who do pay national taxes and depriving national governments of needed revenue. Tackle Tax Havens estimates that SB Miller’s tax planning strategies have lost the treasuries of developing nations up to 20 million pounds, enough to put a quarter of a million children in school. Its turnover in 2009 was 12 billion pounds and its pretax profits 16 percent.

In the United Kingdom, the new business-friendly Conservative government reversed a 10 percent increase in the duty on hard cider, again depriving the government of revenues and losing an opportunity to reduce problem drinking. In Scotland, on the other hand, the government has proposed a new minimum price per unit on alcohol, a move intended to discourage volume discounts that serve as loss leaders for alcohol companies but encourage heavy drinking among vulnerable populations.

In sum, Big Alcohol companies are using a variety of strategies to advance their business interests, from targeting new markets and coopting and weakening regulations to opposing new taxes or lowering existing ones. These practices promote the health of their bottom lines but not of the population in the nations where they do business.


Image Credits:

1. MommyJuice

2. Alcohol Concern

3. ActionAidUK