🔒Getting rid of a boondoggle for package stores

Package stores recently found an unlikely ally in their goal of holding on to an archaic, anti-competitive special interest known as minimum-bottle pricing — anti-alcohol advocates. These advocates often put forth opinion pieces dressed up as research and then make huge logical leaps in unrelated conversations to restrict alcohol consumption.

The advocates argue that ending minimum-bottle prices for spirits and wine would be a significant risk to public health — despite the fact that the other 49 states with no such statute are doing fine health-wise.

And they argue that the additional money charged to consumers was necessary to off-set societal costs — despite the fact that the additional revenue does not benefit the state or any public program. The anti-competitive policy simply lines the pockets of package-store owners who lobby vigorously to keep market forces out of their business.

Minimum-bottle pricing is nothing more than a scheme that allows alcohol wholesalers to set the minimum price at which all retailers must sell. This artificially imposed price — which has no calculated relationship to the per bottle wholesale price — disserves the public and only benefits retailers who wish to avoid competition and make customers pay more.

The minimum- pricing scheme has three negative economic effects.

First, higher prices restrict how much alcohol consumers can afford, and a typical consumer has to switch to cheaper brands. While value brands offer good value for the money, why should Connecticut be forcing us to consume cheap booze?

Second, many consumers end up crossing state lines for lower prices. For both of these effects, Connecticut loses revenue. Connecticut already has high excise taxes on alcohol and lowering it would be a positive step. But even if the excise tax rate were lowered, minimum pricing would allow package stores to keep those savings for themselves. Thus, ending minimum pricing is the only strategy likely to result in lower consumer prices.

Stores should be allowed to, or have to, compete for customers and set prices based on supply and demand, not arbitrarily established minimum-bottle prices. The pricing requirement serves no legitimate policy purpose but merely forces consumers to spend more.

Would lower alcohol prices lead to a decrease in Connecticut residents' health? Not at all. We know from the Scientific Report of the 2015 Dietary Guidelines Advisory Committee that moderate consumption of alcohol is shown to be a component of “a beneficial dietary pattern in most studies.”

Another CDC study published in American Journal of Public Health in 2011 cited moderate alcohol consumption as one of four healthy lifestyle behaviors that, in combination, can help people live longer. The four lifestyle behaviors were: having never smoked, eating a healthy diet, getting regular physical activity and moderate alcohol consumption. The CDC researchers concluded that these low-risk lifestyle behaviors, “exert a powerful and beneficial effect on mortality.” My own research on alcohol and earnings also found that drinkers earn 10 to 14 percent more than otherwise similar non-drinkers. It likely has something to do with social drinkers engaging in more business networking with colleagues and potential clients. 

While anti-alcohol advocates try to confuse the issue in order to further their agenda, their points have little relevance to a state government enforcing a decades- old statute that serves only to protect package stores from competition in a free market. Ending minimum-bottle pricing will not lead to the end of society — it will simply mean better prices and more options for consumers, and a merrier state.  

Edward Peter Stringham is the Davis Professor of Economic Organizations and Innovation at Trinity College in Hartford.