Government alcohol monopolies as instruments for public health and welfare
As a psychoactive substance, alcohol is attractive to humans - attractive enough, indeed, that it can be sold for much more than it costs to produce and provide. For some drinkers, its consumption becomes a habit: typically the heaviest 15% of drinkers account for more than half of the alcohol consumed.
But alcohol is also a substantial source of harm to health and welfare. As an intoxicant, it interferes with cognition, agility and judgement, and thus is a substantial factor in traffic and other injuries, and in violence in the family and on the street, resulting in harm both to the drinker and to others. It also has long-term adverse effects on health, as an important risk factor for a number of cancers, in some heart ailments, in liver disease and in several infectious diseases. Assessments in recent years of global risk factors for ill-health and early death have consistently found alcohol among the 10 most potent risk factors.
Alcohol is also a substantial source of harm to health and welfare.
Alcohol use has thus been discouraged or forbidden in many religious and cultural traditions, and in many parts of the world a century ago social movements to limit or ban it were second only to workers’ movements. Where it is available for sale, it is usually not an ordinary grocery product, with sale to children forbidden, and specific controls on how, when and when it can be sold. Production, wholesaling and retail sale – whether by the bottle to drink elsewhere or by the drink for consumption on-premises – are commonly under a specific licence. The alternative is for a government itself to run all or part of the sales through a government monopoly. While there was an earlier history of such monopolies of alcohol and other profitable substances as a revenue source for governments, in the late 19th century the idea of monopolising the sale of alcohol as a public health and welfare measure took root, first in the Nordic countries, and then more widely.
While these alcohol monopolies were initially at the level of the town government and primarily of on-premise drinking, by the mid-20th century they were at the national or provincial level and were primarily of off-premise alcohol sale. The idea of alcohol monopoly as a policy to minimise problems from drinking had spread quite widely, within Europe, North America and in many developing countries in Latin America, Africa, and the Asian and Pacific region.
However, in the neoliberal era of the later 20th and early 21st century, many of these government monopolies were weakened or abolished. When Finland and Sweden joined the European Union, the EU’s single market policies forced them to abandon the monopoly at the wholesale and import level, though they managed to keep their retail monopolies. In the same period, the substantial research literature has built up which provides concrete evidence on the effects of alcohol monopolies on the level and patterns of alcohol sales, and on rates of alcohol-related health and welfare harms. Ironically, a major facilitator of these studies has been the opportunity to study what happens when a monopoly is weakened or abandoned.
The idea of monopolising the sale of alcohol as a public health and welfare measure took root, first in the Nordic countries, and then more widely.
While there are also gains to public health and welfare from monopolies at the production or wholesale level, we concentrate here on the retail model in which the major part of alcohol is sold: sale by the bottle or other container for off-premise consumption. Reviews of studies of privatisation (and of one remonopolisation) have found that monopolies have an effect in holding down levels of alcohol sales and of alcohol-related problems. A review committee convened by a US government agency concluded that there was “strong evidence that privatization of alcohol sales leads to increases in excessive alcohol consumption”. There is also a substantial literature of studies finding positive effects of alcohol monopolies on a wide assortment of specific health and welfare harms.
Monopolies have an effect in holding down levels of alcohol sales and of alcohol-related problems.
There are many elements of the monopoly option which contribute to this result. A monopoly will have a limited number of outlets, not one on every corner competing with one another, and there is substantial evidence that the density of sales outlets is related to higher alcohol consumption and problems. Monopolies will usually have shorter hours of sale, another aspect of availability which has been found to reduce alcohol consumption. And there is not the aggressive advertising and promotion of private interests competing with one another and seeking to boost sales. Another aspect in which a monopoly may behave more in the public health interest is in the choice and display of products, and their pricing; it is no accident that the earliest data on the positive public health effects of minimum unit prices came from government monopoly systems.
Also, a job at a government store is normally steady and pays a good wage, and such staff are more likely to follow rules about not selling to customers who are under the drinking age or who are already intoxicated. The store and monopoly system will have what used to be called a “disinterested management” – management that does not have an obvious stake in how much alcohol is sold: the managers’ pay and job advancement will not be tied to this. An important factor is that the monopoly occupies the place in alcohol distribution which would otherwise be occupied by private interests with a strong and continuing interest in lobbying to improve their profits by weakening or removing limits on the availability of alcohol.
The way a government monopoly is organised and its place in the government can substantially affect the extent to which it is acting in the interests of public health and welfare.
Let me add a caution. The way a government monopoly is organised and its place in the government can substantially affect the extent to which it is acting in the interests of public health and welfare. Before the current era of government getting their primary revenue from income, sales and corporation taxes, government monopolies of alcohol and other psychoactive substances were often primarily motivated by a thirst for profits at least as strong as that of any private seller. To serve the interests of public health and welfare, a government alcohol monopoly needs to be set up with a mandate and governance structure directed toward those aims. For instance, it is less likely to serve these interests if the monopoly is organised under the government’s finance department.
Given an appropriate mandate and governance structure, an alcohol monopoly can thus be a powerful instrument to limit alcohol-related harms to public health and welfare.
Centre for Alcohol Policy Research (CAPR) | School of Psychology & Public Health, La Trobe University, Australia
Centre for Social Research on Alcohol and Drugs, Department of Public Health Sciences, Stockholm University, Ruotsi
Robin Room is a sociologist who has previously directed alcohol and drug research centres in the United States, Canada, Sweden and Australia. His main research interests are social, cultural and epidemiological studies of alcohol, drugs and gambling behaviour and problems, social responses to the problems, and the effects of policy changes. A member since 1979 of the WHO Expert Advisory Panel on Drug Dependence and Alcohol Problems, Room has received the main international prize in alcohol research, the Jellinek Memorial Award (1983), and in Australia the Prime Minister’s Award for Excellence and Outstanding Contribution in Drug and Alcohol Endeavours (2012).