Beer, wine prices may rise

    A review of alcohol laws should focus on banning price-based advertising of booze, rather than raising excise taxes, say industry groups.

    Law Commission president Sir Geoffrey Palmer has said the commission will recommend significant changes at the conclusion of its review of alcohol laws, and last week suggested increasing the excise tax on alcohol to pass more of the social cost of drinking on to drinkers and brewers. The current excise take of $795 million is dwarfed by the estimated $5.296 billion social cost of alcohol each year.

    But Hospitality Association chief executive Bruce Robertson said excise tax hikes, adjusted to meet inflation each year, were not passed on to consumers. Large retailers such as supermarkets had the buying power to refuse to pay suppliers the increased price, and used heavily discounted alcohol as a "loss leader" to attract customers.

    Over the past decade, there had been a widening of the gap between the price of alcohol at supermarkets and at licensed premises, which typically lacked the buying power to absorb the increases in excise tax.

    "The consequence has been reasonably significant in terms of where people drink," Robertson said. Ten years ago 60% of alcohol was bought from off-licence premises and 40% at licensed premises; these days the ratio is 70/30.

    "Any increase in the excise tax will exacerbate that trend and encourage people to drink in unsupervised environments," he said. "We would argue the safest place to drink is a licensed premises - it's the only place anyone can get pinged for being intoxicated. The licensees are charged with looking after their customers, which is certainly not the case when they're drinking at home."

    Alcohol is currently taxed at a rate of 33c on a 330ml stubbie of beer and $1.86 on a bottle of wine.

    Lion Nathan spokeswoman Liz Read said the proliferation of liquor retailers, whose numbers had almost doubled since the introduction of the 1989 Sale of Liquor Act, had led to a highly competitive retail market. In this environment, raising excise tax was not an effective tool in lifting the retail price of alcohol. "We don't set the retail price of alcohol," she said. "Retailers do."

    Robertson said supermarkets had a large hand in the glut of low-priced alcohol. "The solution is for alcohol not to be a product on which you compete on price. Simply ban anybody being able to advertise the price of alcohol [and] you're removing the incentive for it to be used as a loss leader."

    Palmer has said price advertising for alcohol products was an issue that "may also need attention". Other measures floated by the commission last week included raising the drinking age to 19 or 20, reducing the driving limit, and restricting opening hours and advertising. The review was ordered by the previous government after the shooting of Navtej Singh at his Manurewa liquor store last June.

    A police national alcohol assessment this month showed alcohol had been a factor in a third of all violent offences. In nearly half the homicides in the past decade, the suspect or victim was under the influence