Beer Marketer's Insights
More than 2 months back, at the annual Beer Institute meeting in August, top beer industry executives were warning they could "see an excise tax storm coming." Beer was "in the crosshairs," and in the current cost environment a federal excise tax hike "could be crippling." And that was before the economic situation got so much worse. Subsequently, there has been both good news and bad news on taxes. On Election Day, Maine voters soundly rejected a steep beer, wine and non-alcohol beverage tax that had been adopted by the state legislature and signed by the governor to help fund a state health insurance system. But in California, Gov. Arnold Schwarzenegger recently proposed a nickel-a-drink excise tax to close a huge budget gap. Given similar budget problems in many other states, and the fact that many states haven't raised excise taxes in many years, it's likely that alcohol beverage tax hikes will at least be on the table across the country in coming months.
In recent comments to INSIGHTS, Beer Institute president Jeff Becker pointed to signs of a "perfect storm" threatening beer as "ballooning federal deficits, expiring tax cuts and a changing political landscape" and other factors "raise the very real possibility that a proposal will surface to raise the already high federal excise tax on beer." A coalition of brewers, wholesalers, retailers and consumers is prepared to argue that excise taxes on beer are especially regressive since half of all beer is purchased by households with incomes of $50,000 or less, Becker points out. The brewers will also continue their efforts to roll back the 1991 increase, efforts that over the last two years succeeded in obtaining "a bipartisan majority in the House of Representatives and a record number in the Senate to support" the rollback. At the very least, the decades-long rollback efforts should provide some insulation against a federal hike. What about the states? Beer Institute "expects excise taxes to come up as state lawmakers attempt to balance their respective budgets" and "we will continue to work with our allies to aggressively fight any tax increase proposal."
Wine Institute said that "raising the excise tax on wine would depress wine sales, eliminate jobs and result in wine grape acreage being pulled out of production." The wine business "should be supported and promoted," WI added, "not subjected to punitive and regressive taxation." NBWA president Craig Purser told INSIGHTS: "Congressional leaders understand the fact that excise taxes are paid by the same Americans that are facing a consumer credit crisis, increased unemployment and the prospect of losing their home. At the state level, citizens have recently demonstrated their opposition to higher excise taxes in states like Maine by an overwhelming margin."
Higher excise taxes are most directly and painfully felt at the retail level. Harry Wiles at the American Beverage Licensees sees the potential for an "anti-business legislative climate in the 111th Congress" and "a very strong push to increase federal excise taxes by traditional anti-alcohol interests as well as other interest groups seeking to enact and fund programs they favor." Meanwhile, ABL's state members are "preparing for tax fights in 2009 as governors and state legislators seek new revenue sources. We have already seen three western governors float the idea of tax increases to offset funding shortfalls," Wiles pointed out, and "we expect funding-hungry legislatures, cheered by
propaganda wielding anti-alcohol groups, to target the hospitality industry with tax increases."
One sheaf of papers likely to be wielded by those pro-tax forces is a recent study of two Alaska excise tax hikes that purportedly led to steep declines in alcohol-related deaths and illnesses. The widely reported studies by long time alcohol researcher/advocate Alexander Wagenaar found: a 1983 increase (35-40% for each beverage) led to a 29% decline in deaths from diseases deemed alcohol-caused or alcohol related. (The study did not look at traffic-crash deaths or potentially alcohol-related violent incidents.) A much larger increase in 2002(a tripling or more per gallon) correlated with an 11% decline in alcohol-related disease deaths. The researchers did not measure consumption or retail price, since "complete and accurate measures" weren't available, but figured that the "theory behind the mechanism" -- that higher prices would inevitably lead to less drinking and less problems - "is so well established" that these missing links don't "reduce the plausibility of the findings."
Dale Fox, president of Alaska's Cabaret, Hotel, Restaurant, Retailers Assn responded: "It is inconceivable to me that a 2-cent or 10-cent per drink alcohol tax increase made any substantial difference in the drinking habits of the hard-core problem drinker who is on his way to cirrhosis of the liver or any of the other long-term illnesses these researchers considered." Fox pointed to other factors that may have reduced heavy drinking in Alaska during these years, including mandatory server training, happy hour bans, increased DUI penalties and enforcement. DISCUS pointed out that "repeated studies have shown that chronic alcohol abusers are unaffected by price."
Wagenaar addressed the "counter-intuitive" finding of immediate, sharp declines in alcohol-related diseases among long-term abusers. "Mortality caused by long-term, chronic alcohol use responds immediately to a change in drinking levels, because at any given time there is a reservoir of individuals in the population who are about to die from a chronic alcohol-related disease. Even modest reductions in current drinking immediately retards progression" of diseases for this group, leading to an "immediate reduction in the death rate as found in the present study." Flawed or no, the Alaska study will likely be Exhibit A for tax supporters in the coming year. Ref 1
Odds & Ends & Updates In the States
Nebraska's Liquor Control Commission decided not to reclassify flavored malt beverages as liquor
ICAP Report Explores Alcohol and Violence
The broadly accepted causal link between alcohol and violence fuels many efforts to reduce drinking and availability. But the precise relationship remains complex and unclear. The industry-sponsored International Center for Alcohol Policies (ICAP) recently published a collection of papers to examine the relationship, titled "Alcohol and Violence: Exploring Patterns and Responses." Here are some highlights.
"Sociocultural Factors that Foster or Inhibit Alcohol-related Violence" argues that the relationship between alcohol consumption and violence, "is always complex, whether it concerns the behavior of a drinking individual, a group of drinkers, or a cultural collective such as an army." Author Anne Fox of Galahad SMS Ltd, British social science/education consultants, points out that although vast "anthropological evidence suggests" humans "can be a violent lot," most people don't want to accept that fact. They look for other factors to blame for causing violent behavior. Alcohol is always a main target, but should not be, in her view, especially in cultures that "glorify violence." "We would far rather believe that a certain malleable element of our culture - drinking - is the root cause of most violence, and if it were eliminated, we would return to our peaceful, noble state," Fox contends. But a quick historical review shows that "some of the most violent cultures in the world have been decidedly not drinking cultures." Therefore, rather than using alcohol drinking as a "convenient scapegoat," society needs "to look more closely at the meaning attached to both drinking and violence in different cultures, without assuming that the one causes the other."
Problems created with violence by young men in particular, won't be eliminated, "until realistic and practical measures for channeling such impulses are found," Fox suggests. "Once we stop blaming the alcohol for problems that we create and understand alcohol's role in responding to some fundamental human needs, we will be able to shape our beliefs, our rituals, our settings, and our expectations to produce a more realistic outcome, the peaceful enjoyment of the undoubted human good that alcohol can provide," Fox concludes.
"The Role of Drinking Patterns and Acute Intoxication in Violent Interpersonal Behaviors" examines "the role of alcohol intoxication and long term drinking patterns in the occurrence of violence." Kenneth Leonard, from the Research on Addictions and Dept of Psychiatry at State University at Buffalo, finds "the association between drinking patterns and violence is robust across samples, types of violence, and, to some extent, across cultural groups." There is "some uncertainty," he believes, about whether how frequently a person drinks alcohol, the quantity they consume, or some combination is the "critical variable." However, "some evidence suggests that the critical aspect of the drinking pattern is the frequency of drinking large amounts of alcohol," specifically to the point of intoxication. There is evidence that drinking to intoxication and likelihood of violent behavior, "is somewhat of a threshold effect, with increases observed primarily at and beyond once-a-week intoxication."
In her paper, Anne Fox argues that to counteract violent culture and "the male propensity for aggression," wrongful beliefs about alcohol and social responses to violence need to be addressed. "Working with Culture to Prevent Violence and Reckless Drinking" focuses more on changing the broader culture. "Efforts to reduce violence and the problem drinking that stems from its cousin, recklessness, must also go to the root of these dynamics: the very gender roles that help create many of the propensities, beliefs, and responses of which Fox writes," suggest attorney Courtney Mireille and ICAP's Claire Dickson. They argue: "The time has come
"I never cease to be amazed by our culture of alcohol." That's how Milwaukee Journal Sentinel editor Martin Kaiser introduced a remarkably detailed 5-part series last week titled "Wasted in Wisconsin." The paper's purpose: "To increase awareness of a critical issue in our state -- the abuse of alcohol and the powerful and destructive impact it has on every segment of the larger community." The JS called on 49 journalists to contribute to the series. Each of the articles balanced statistics and expert opinions with moving human profiles of victims. The paper's website ran the articles along with extensive graphs, tables and interactive features. Here are the highlights:
The opening article of the series explores the state's drinking culture and tries to explain why Wisconsin has the highest percentage of drinkers in the nation, the highest percentage of adults who binge drink and the highest percentage of adults who admit to driving under the influence, according to several national surveys. The state also has "three times more taverns" per capita than the national average. JS points out that despite the high percentage of drinkers in Wisconsin, and high heavy drinking rates, rates of alcohol-related problems/deaths are not significantly higher than in many other states. Some suggested reasons for Wisconsin's "wet" culture: climate, ethnicity and the historical importance of the beer industry. Through extensive interviews with citizens, JS also discovered a "pride in being a hard-drinking Wisconsinite."
The second article focused on the state's relatively lax drunk driving laws. First time offenders are still only ticketed. Relatively few repeat offenders do jail time. Judges have wide discretion in applying penalties. The follow-up described the experience of a single, especially egregious repeat offender (over 10 drunk driving convictions) who the paper estimated ran up costs of "nearly $365,000" with nearly $240,000 coming from "other people's pockets in the form of tax dollars or insurance payouts."
Shifting gears, the 4th installment detailed the extensive clout of the Wisconsin Tavern League which has "a remarkable ability to get what it wants," the JS found. That includes delaying the adoption of .08 BAC, keeping first-time drunk drivers from facing criminal charges and stopping excise tax hikes and smoking bans. The Tavern League "has a better batting average than the much larger teachers union and state chamber of commerce," JS points out, despite spending a fraction of what those organizations spend on lobbying and political campaigns. The loss of a key "go-to lawmaker" in the state Assembly and growing activism on the drunk driving issue may change the landscape in coming sessions, JS suggests.
The final article described many of the 37 drunk driving deaths that occurred on a single highway in the state from 2003 to 2007. It tied many of the deaths to bars and cited several studies from other states linking on-premise outlet density with traffic fatalities. It also quoted economist Phil Cook's advice that the best way to reduce drinking-related problems was to "encourage moderation among all consumers by raising taxes on alcoholic beverages."
"The Journal is not about to embrace a crusade for Prohibition," Kaiser wrote. The series does not explicitly endorse any specific policies, other than stricter drunk driving laws. But the focus is clearly on the abuse of alcohol. And Kaiser concluded his introduction: "You know, all Wisconsinites should know, that the status quo is no longer an option." Ref 3
A widely reported study of nearly 80,000 Californian men age 45-69 found that those who regularly consumed red wine had significantly lower risk of lung cancer, the leading cause of cancer death in the US. Non-smokers who drank over one glass of red wine per day had a 45% lower risk for lung cancer than non-drinkers. Smokers who drank at least 1 glass of red wine daily had a 61% lower lung cancer risk. The authors reported "no clear association" between consumption of other alcohol beverages and lung cancer risk and concluded: "We did not find any clear adverse effect of alcoholic beverage consumption on the risk of lung cancer among these men. For example, daily beer drinkers had a 22% reduced risk for lung cancer, daily white wine drinkers a 13% reduced risk and daily spirits drinkers a 7% reduced risk. And among smokers, daily beer drinkers had a 26% reduced risk. Lighter beer drinkers had an increased risk for lung cancer, among these men and among smokers. Ref 1
Seeking "Common Ground" Between Middle Tier and Public Health Advocates; Marin Meets NBWA
The next step in the evolution of a relationship between the National Beer Wholesalers Association and public health advocates (see AII, Feb/Mar 2008) took place last week in Dallas. The Center for Alcohol Policy - set up earlier this year by NBWA to "encourage dialogue" between industry, public health advocates, regulators, consumers and others on alcohol policy issues -- held its first legal symposium.
While the presenters mostly avoided discussion of specific policy issues (taxes, ad/marketing restrictions, minimum age, etc) and focused on a broader embrace of regulation, several of the speakers reached out to public health interests. Professor/attorney Steve Diamond wondered why public health advocates hadn't been invited to speak at previous meetings of regulators: "It is unwise for regulators or legislators to be concerned with the sellers alone and to confine dialog to them," Diamond said. He also embraced the basic control of availability approach: "What is new also is the emphasis of the public health community on aggregate consumption and a climate of control, which evidence shows reduces abuse. Public health advocates reject only targeting youth, or alcoholics, the preferred industry strategy. They, in effect, have embraced the Repeal Program." Attorney and wholesaler advocate Mike Madigan sounded a common public health theme when he said there are "good reasons to restrict the number of alcohol outlets in any given community." Madigan believes that communities - be they states, cities or more local jurisdictions -- should determine the scope of alcohol availability. And, like most advocates, he firmly believes the number of outlets in any given community is directly linked to drinking habits and drinking problems. More important perhaps, NBWA included Marin Institute's Michele Simon on the program, together with long-time public health official Glen Wieringa from New Mexico's Dept. of Transportation.
"We're not crazy, or even the enemy," Simon insisted. Public health advocates, she said, merely want reasonable restrictions, based in science, to reduce alcohol-related problems. "We will go away when the problems do," she promised. Attempting to dispel some key "myths," Simon assured that public health advocates are neither neo-prohibitionists nor anti-business. One area where public health and industry members are clearly aligned: Alcohol is "unlike any other product," Simon pointed out, sounding a common industry theme in support of regulation. But she also forcefully advocated a public health agenda rejected for decades by industry interests (often most vigorously by NBWA itself). The "key influences" on youth drinking, she claimed, are price (to which youth are "especially sensitive"), access and marketing methods that "make alcohol appear to be essential and fun." She neglected to mention the influence of parents, peers and youth risk-taking attitudes in general. Another "reality": education alone "has proven to be a dismal failure. No public health problem has ever been solved by handing out brochures," Simon said.
She dismissed industry's "drink responsibly" messages and voluntary ad codes/3d party review efforts as "not working," "ineffective" and "self-serving." (Simon backed off a bit on the blanket attack of responsibility efforts during Q&A, acknowledging not all were "negative.") Citing the work of Center on Alcohol Marketing and Youth (CAMY), Simon also claimed there's "no longer a scientific question" about a connection between marketing and underage drinking. She neglected to mention the studies that continue to raise questions about this link and the flaws in the studies that purport to prove it. Nor did she note the criticisms of CAMY's methodology made by FTC and others, or the fact that over 6 years and nearly 3 dozen reports, CAMY simply counted ads. It never asked a single youth a single question about the effect of advertising or his/her drinking habits. Finally, Simon said that regulating alcohol beverage ads "does not conflict with the 1st Amendment." The US Supreme Court, the Federal Trade Commission, and many, many others, have publicly differed.
What does Marin want? Simon wants the industry to:
- Stop "making products that appeal to youth"
- Stop "deceiving regulators about 'alcopops' being beer." Sparks, she said, was "incredibly dangerous" and a "poster child for insanity."
- Stop marketing in "youth friendly ways" and venues, including AB's Super Bowl ads.
- Stop "exploiting communities with dirt-cheap products," and naming products after crimes and guns, i.e. Colt 45 and Steel Reserve.
- Stop using sex to sell products.
- Stop "obstructing public policy efforts to alleviate problems."
- Stop "excluding public health advocates from regulatory discussions."
- Stop "acting like public health is the enemy."
Asked whether NBWA supported any of Simon's recommendations or her new "STOP Act," legal counsel Paul Pisano demurred. These efforts are still in early days, he and president Craig Purser suggested. Madigan pointed out: "Reasonable minds can differ" about specific policies, the balance of price/availability and control and where the "fulcrum" should be placed, but local communities should make those decisions. "The debate is healthy," he asserted.
At a time when suggestions to lower the drinking age in the US are garnering serious discussion and wide media coverage, an influential safety group is advocating increasing the age to become a licensed driver to 17 or 18. "It's a tough sell, all right," said Anne McCartt, a senior vp of research at Insurance Institute for Highway Safety. "It's an important enough issue to challenge the silence and at least consider changing the age at which we allow teenagers to get their licenses to drive," she added. That idea may be a tough sell indeed for teens anxious to get their licenses and some parents who may not be so keen on chauffeuring their kids all the way until college. Those disappointments are outweighed however by statistics that show graduated licenses save lives, say public health officials. Over 5,000 teens die each year, and the rate of both fatal and non-fatal crashes for 16-yr old drivers is 10 times higher than those age 30 to 59, according to The National Highway Safety Foundation. IIHS reported in 2007 it found lower crash rates "in state after state" that used graduated systems. Similar results have been found in Europe where most countries issue licenses at 17 or 18 yrs of age.
The same IIHS report raises question whether it's a driver's age or experience and/or driving habits that really count. An analysis of NJ crash rates found "death rates are slightly higher among 17-year old drivers in New Jersey, likely because they have less experience behind the wheel than drivers the same age in Connecticut." The effect of driver distraction in auto crashes has been highlighted recently as well. A recent test of drivers 18-25 found that while their field of view was "not significantly affected by low alcohol concentration," the findings suggest using a hands-free cell phone while driving "may lead to a low-to-moderate crash risk in young adults."
The upcoming American Public Health Association (APHA) meeting will shine a spotlight, and no doubt deliver numerous anti-industry barbs, on a number of hot-button policy issues during a sprawling 3
Researchers and activists continue to attempt to tie greater alcohol outlet densities to various drinking and safety problems. Such ties would support environmental policies to restrict the number of outlets per population or neighborhood. But they continue to come up with mostly "suggestive" and very modest results based on correlations, as we reported in our May issue. New cases in point: a pair of studies associated with Berkeley's activist Prevention Research Center and Pacific Institute for Research and Evaluation (PIRE). Both are suggestive; neither is definitive.
The first study was headlined on the medical newswires as: "More off-premise alcohol outlets can lead to more injuries among neighborhood children." The pull quote: "They found that neighborhoods with a higher density of off-premise alcohol outlets such as liquor stores and grocery stores that sell alcohol had more injuries among children." The study looked at childhood injuries, assaults and reports of child abuse in 2000 over 1,646 California zip codes. The authors found that "all 3 outcomes were directly related to percent of female-headed households, percent African American residents and density of off-premise alcohol outlets." The results "suggest" that high levels of alcohol outlets "may reduce the overall level of guardianship of children's activities" in these areas. But they also point out that in the study "there is no direct measure of parental monitoring or parental alcohol use." That means their conclusion about "parental monitoring" is a "line of reasoning" that "remains speculative." Indeed, in laying out the reasoning, the authors use language like "can be logically assumed" and "could be argued." And in the end their "conclusion" linking outlet density to parental monitoring is "provided for thoughtful consideration only."
The second study included a survey of 14-16 yr-olds about actual and "perceived" access to alcohol, drinking habits and from where they obtained alcohol, formal (stores) or social (friends) sources. Interestingly, the sample of about 1500 young Californians found substantially lower percentages of drinkers than national surveys would suggest, so it would be a mistake to extend their findings to other populations. In any case, the authors' basic conclusion: the relationships between access and consumption are very complex, with no direct, consistent or certainly causal relationships between outlet density and actual drinking patterns. How complex? "Perceived alcohol availability and consumption are associated although the nature of this association is impossible to fully understand."
One important finding that probably didn't need to be researched: as one form of access, say the number of outlets, "becomes constrained, youth may circumvent such restrictions by relying on other modes of access. Thus interventions targeting formal access may, in fact, simply shift youth's focus to reliance on informal or social sources." And since the study found that 95% of all reported drinking occasions among these youths "involved alcohol obtained informally," a focus on licensed outlets doesn't make much sense. Indeed, the authors state that "prevention efforts currently focusing on social access are well directed."
What are the implications for prevention? "Practitioners must consider this complexity," the authors conclude. "In fact, the argument could be made that young people can circumvent prevention efforts by shifting or substituting models of access given changing availability structures." Both social access and formal access need be addressed, they suggest, and "single solution approaches are unlikely to prove successful." But, since only a tiny percentage of teens obtain alcohol from licensed premises (5% or less according to this and national surveys), and social access can't really be effectively controlled barring police- state tactics, perhaps prevention efforts would be far better focused on teens themselves rather than on availability in the first place. One could argue. Ref 3
Industry members and associations continue to find new ways to communicate responsible drinking/ serving messages to their customers and members. Diageo, the world's largest distiller, and SABMiller, the world's largest brewer (until AB InBev closes), recently launched new websites aimed at providing information resources and guidelines to help consumers "make responsible choices about drinking." The sites are aimed at legal drinking age visitors, and require visitors to provide a birth date to enter. Each of the companies include sections with facts about how alcohol affects the body, resource centers including material prepared by various organizations, responsibility efforts and links to health groups, government agencies and associations. The sites are interactive, including forums where visitors can provide input and get feedback. Diageo's has videos with experts like Dr. Curtis Ellison and David Hanson who provide brief presentations about how alcohol affects women differently than men, targeted interventions and other topics. Interestingly, while NHTSA has turned toward a focus on impaired driving (see above) each of these alcohol beverage giants advances a zero tolerance message on drinking and driving. Diageo's website includes the advice that the "wisest" choice if planning to drive is not to drink at all. SABMiller says "The message is simple: don't drink and drive." One area where the sites predictably diverge: Diageo's "Facts About Alcohol" section includes definitions of a "standard" drink with the familiar graphic equating a mug of beer with a mixed drink and a glass of wine, plus the statement that "there is no more potent form of alcohol just as there is no safer form of alcohol." SABMiller barely mentions other beverages outside of its news feed.
Elsewhere, the retailer association American Beverage Licensees has signed on with Learn2Serve to provide online server training courses. The "ABL Virtual University" provides courses in server training, basics of screening identification, an introduction to wine course, sexual harassment prevention and others. Costs range from $10-$100 per course. The websites: www.drinkiq.com; www.talkingalcohol.com; www.360training.com/abl.