Almost 70% of spirits hit by Scotland’s MUP

The introduction of minimum unit pricing will ramp up the cost of more than half of Scotland’s total alcohol sales, with the price of blended Scotch set to rise by 20%, according to Nielsen.

Nielsen analysed till sales – Electronic Point Of Sales (EPOS) data – in almost 1,200 stores across Scotland, and found that the blended Scotch category will be hit the hardest, with vodka coming in second – requiring a 16.3% rise to to meet the 50p per unit threshold.

The research revealed that 69% of spirits volume currently sold does not meet the threshold, which was given the go-ahead by the Court of Session in Edinburgh last month.

Beer follows the spirits category with 67% of volume currently below the threshold, followed by cider at 51%. Wine will be the least impacted of all, as just 3.5% of sales will require price increases.

“Wine is, by far, the least impacted and so has the most to gain from minimum pricing,” says Marika Praticó, senior client manager at Nielsen. “Overall, wine will need to raise prices by the least amount, thus, it becomes more affordable relative to other alcohol.”

When looking at the top 50 selling products in each category, Nielsen revealed that 76% of the most popular spirits don’t meet minimum pricing – compared to 74% in beer, 54% in cider and 12% in wine.

Despite this, Praticó says that enforced prices could result in increased revenue for the spirits industry, as long as demand does not drop below a set “tipping point”.

“This break-even figure is 12.5%,” she said. “As long as any potential decline in demand doesn’t exceed this the industry will benefit thanks to the higher price point. Should demand fall by more than 12.5%, that’s when their revenues will decline.”

Higher-end spirits brands are “likely to benefit” from MUP, according to Praticó, as the price differential between premium and standard offerings is reduced.

“It’s a good time for people to ‘trade-up’ to the more expensive brands, which is likely to have a negative impact on supermarkets’ own-label offerings,” she said.

Praticó has also predicted a “near extinction” of retailer booze deals in the future, and an increase in cross-border alcohol shopping from Scotland to England and Ireland – “mirroring what many Britons already do with the annual Calais run”.

An “inevitable stockpiling” of alcohol before the legislation comes into force is likely ahead – and Praticó forecasts “a bumper Christmas for alcohol retailers”.