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Economic Issues in Alcohol:
Marketing, Business & Money

by David J. Hanson, Ph.D.

Alcoholic beverage economic issue resources are presented in terms of:

  1. Economic Costs of Alcohol Abuse
  2. Alcohol Taxes
  3. Sunday Alcohol Sales and Blue Laws
  4. Alcohol Marketing/Advertising/Sales
  5. Other Alcohol Beverage Economic Issues

I. Economic Costs of Alcohol Abuse

Alcohol Abuse: The Economic Costs - Federal statistics on the economic costs of alcohol abuse fail to conform to standard accounting methods. The result is that they are highly inflated.

Underage Alcohol Drinking Costs - The economic costs of underage alcohol consumption are $5.4 billion while the economic benefits are $18.1 billion. Thus there is no economic cost of $61.9 billion but a net economic benefit of $12.7 billion. Although the United States benefits economically from underage alcohol consumption, the abuse of alcohol is nevertheless highly undesirable.

The Economic Cost of Alcohol Abuse - Federal estimates of the economic costs of alcohol abuse are highly inflated and serve the self-interests alcohol agencies.

Bar Can Sue Underage Drinkers - Owners of an Indiana bar that could have lost its liquor license for serving minors can sue the underage drinkers for financial damages the Indiana Court of Appeals has ruled.

Alcohol Producers Sued - Several alcohol beverage producers face a lawsuit alleging illegal marketing and advertising to underage persons and seeking large financial payments.

Readings:
  • Barsby, S. A review of the Heien and Pittman study on the costs of alcohol abuse, Moderation Reader, 1990 (January/February).
  • Heien, D. The external costs of alcohol abuse, Journal of Studies on Alcohol, 1996, 57, 336-342.
  • Heien, Dale M., and Pittman, David J. The economic costs of alcohol abuse: An assessment of current methods and estimates. Journal of Studies on Alcohol, 1989, 50, 567-579.
  • Weinberg, R. Benefits of alcohol use wash out the costs of use says noted economist, Moderate Drinking Journal, 1987, 1(5).

II. Alcohol Taxes

Moonshine is Risky - Moonshine (illegally produced distilled spirits) is a dangerous product that can cause blindness, paralysis and even death. However, its production is highly profitable and continues because of the heavy taxation of legally produced distilled spirits. Taxes constitute well over half the price of a typical bottle of spirits.

Cost of Alcohol and Its Consumption - Scientific evidence simply doesn't support the proposal to raise alcohol beverage prices through higher taxes to reduce illegal underage drinking.

Alcohol Consumption and Taxes: Wet vs. Dry Areas - The question for residents in dry areas isn’t whether or not people will drink those areas but who will get the profits, taxes and other economic benefits from alcoholic beverage sales.

Wet or Dry? Legalize Alcohol Beverage Sales? - The mayor of an Alabama town favors permitting alcohol sales, explaining that “we are ‘wet’ already -- we just don’t get any tax benefits from it.”

Sin Taxes on Alcoholic Beverages - The term “sin taxes” on alcohol could be replaced by “hospitality taxes” or even “regressive anti-worker taxes.” Neither alcohol beverages themselves nor consuming them in moderation is sinful.

Alcohol Tax Cut Recommended - A study commissioned by the Swedish government recommends that the country drop its tax on liquor by 40%. Finland and Denmark have already decided to decrease their taxes sharply on distilled spirits.

III. Sunday Alcohol Sales/ Blue Laws

Blue Laws - Blue laws restrict certain activities on Sunday, to accommodate the Christian Sabbath. Contrary to popular belief, there is no evidence to support the theory that such laws were originally printed on blue paper.

Alcohol Consumer Choice Expanding - Blue laws prohibiting the sale/purchase of alcohol on Sundays have been abolished in 11 states in the last 2 1/2 years. Two-thirds of states now permit alcoholic beverage sales on Sunday, which is now the second-busiest shopping day of the week.

Sunday Alcohol Sales Recommended - A committee of Kansas legislators has recommend allowing stores to sell beer, wine, and distilled spirits on Sundays in cities that approve it.

Readings:
  • Blackwell, Jon. 1921: Never on Sunday. Capital Century. www.capitalcentury.com
  • Blue Laws. Reader’s Companion to American History. Houghton Mifflin Co. http://college.hmco.com
  • Blue Laws. Urban Legends Reference Pages. www.snopes.com
  • Blue Laws. The Columbia Encyclopedia. NY: Columbia University Press, 6th ed., 2001.
  • Blue Laws. www.encylcopedia.com
  • Laband, David N., and Heinbuch, Deborah. Blue Laws: The History, Economics, and Politics of Sunday-closing Laws. Lexington, MA: Lexington Books, 1987.
  • Myers, Gustavus. Ye Olden Blue Laws. NY: Century Co., 1921.
  • Never on Sunday. Word Detective. www.worddetective.com/051600.html
  • Pearson, Erica. NYC’s blue laws. Gotham Gazette, May 26, 2003. http://www.gothamgazette.com/article/ issueoftheweek/20030526/200/405
  • Why Do We Have Sunday Blue Laws? In: Voorhees, Don. The Book of Totally Useless Information. NY: MFJ Books, 1993.

IV. Alcohol Marketing / Advertising / Sales

Spending for Alcohol Ads - The largest alcohol advertisers fall near the bottom of the list of top 50 national advertisers in the U.S.

Effects of Alcohol Ads - Another study of alcohol advertising adds to the consensus among researchers that such ads do not increase alcohol consumption.

Alcohol Marketing and Youth - At the request of Congress, the Federal Trade Commission (FTC) carefully investigated the possible advertising and marketing of flavored malt beverages (FMBs) to underage persons. The investigation found no evidence of targeting underage consumers in the FMB market.

Alcohol Ads and College Sports - The Center for Science in the Public Interest (CSPI) has launched a campaign to prevent any and all alcohol advertising, an important source of revenue, during televised university sports events.

Alcohol Ad Ban Ruled Unconstitutional - A Pennsylvania law banning paid advertising for alcoholic beverages in college newspapers is unconstitutional, a federal appeals court has ruled. Alcohol ads can be an important source of revenue.

NASCAR Invites Distilled Spirits Sponsorships - NASCAR now invites liquor or distilled spirits sponsorships and advertising.

Later Last Calls for Alcohol Safer - States with later last call for alcohol hours tend to have fewer alcohol-related traffic deaths, according to data collected by the U.S. National Highway Traffic Safety Administration (NHTSA).

Lawsuit Charging Alcohol Ads Target Teens Tossed Out - A class-action suit that alleged alcohol producers of encouraging underage drinking with their advertising was dismissed by a California Superior Court.

24-Hour Pubs - Legislation has been introduced in Parliament that would enable pubs and bars to stay open 24 hours a day.

A Movie and Martini - Some movie theatres are serving alcoholic beverages to their customers.

Alcohol Delivery Service - A new service delivers alcohol beverages to individuals of legal drinking age. Mothers Against Drunk Driving (MADD) calls it "frightening."

Alcohol and Business - Sharing an alcoholic drink is a common part of doing business around the world. There’s an expectation that people will indulge in alcohol on business-social occasions and it’s useful in building business relationships.

Selling Alcohol and Saddam Hussein - Some anti-alcohol activists are comparing selling alcohol to selling weapons to Saddam Hussein.

Readings:
  • Baumann, C.S. Call for beer run answered. Orlando Sentinel, 7-20-03.
  • Caruso, David B. Court: State ban on alcohol ads in college newspapers is unconstitutional. Centre Daily Times, July 29, 2004.
  • FTC Says Alcohol Type Not Aimed at Minors. Los Angeles Times (June 5, 2002).
  • Group to colleges: Pull alcohol ads. USA Today, 11-13-03, p. 14C.
  • Melillo, W. FTC: Ads for "Alcopops" Not Aimed at Teens, Adweek (June 6, 2002).
  • NASCAR to allow distilled spirits sponsorships in 2005. NASCAR.com, November 10, 2004.

V. Other

Drinkers Earn More Money - Men in The Netherlands who drink alcohol in moderation are likely to earn 10% more than their abstaining counterparts, according to a study of Dutch men aged 26 to 55 published by the Centre for Economic Policy Research. Research has similarly found that men in the U.S. who drink average about 7% higher earnings than abstainers.

Alcohol and Earnings - Research indicates that Canadian men who drink alcohol earn about 10% more than do abstainers. The study controlled for age, education, occupation, region and health. Professor These findings are similar to those found in Britain and the U.S.

DUI/DWI Can Cost $20,000 - A first offense conviction for DUI/DWI can easily cost $20,000 or more. Even if a driver is innocent, the cost of defense can be very high.

Readings:
  • Drink and Grow Rich. Wall Street Journal, May 4, 2002.
  • Driving drunk can cost $20,000. Washington Times, 1-1-04, p. B2.
  • Mellen, Karen. MADD official gets jail for theft. Chicago Tribune, 4-1-04.

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