Friday, November 16, 2012

Why do Brits drink more than Yanks?

England has a drinking problem:
Since 1990, teenage alcohol consumption has doubled. Since World War II, alcohol intake for the population as a whole has doubled, with a third of that increase occurring since just 1995. The United Kingdom has very high rates of binge and heavy drinking, with the average Brit consuming the equivalent of nearly ten liters of pure ethanol per year.
It’s apparent in their hospitals, where since the 1970s rates of cirrhosis and other liver diseases among the middle-aged have increased by eightfold for men and sevenfold for women. And it’s apparent in their streets, where the carousing, violent “lager lout” is as much a symbol of modern Britain as Adele, Andy Murray, and the London Eye.

The US, is in much better (?) shape:
A third of the country does not drink, and teenage drinking is at a historic low. The rate of alcohol use among seniors in high school has fallen 25 percentage points since 1980. Glassing is something that happens in movies, not at the corner bar. 

Part of the difference is the inefficient 3-tiered distribution system in the US, which is not only much less efficient at delivering beer to consumers, but also results in so-called "triple marginalization," each stage of the vertical supply chain takes its own markup, with the result that the final price is much higher than would be charged by a vertically integrated producer-distributor-retailer.
...most states, requires that the alcohol industry be organized according to the so-called three-tier system. The idea is that brewers and distillers, the first tier, have to distribute their product through independent wholesalers, the second tier. And wholesalers, in turn, have to sell only to retailers, the third tier, and not directly to the public. By deliberately hindering economies of scale and protecting middlemen in the booze business, America’s system of regulation was designed to be willfully inefficient, thereby making the cost of producing, distributing, and retailing alcohol higher than it would otherwise be.

1 comment:

  1. Stephen on November 25, 2012 7:50 PM:

    My student's family lost a major distributorship when Imbev took over AB. No discussion, just out. Just business. As we learn in econ, makes sense for InBev to work to control all aspects of production, distribution, and sales, and then lower the price of their product, which will shut down larger competitors. InBev likely won't touch the boutique brewers from Sam Adams on down, just as Coca Cola takes a laissez-faire approach to minor soft drink bottlers, and as Walmart tolerates Dollar General. The majors consider these threats about as seriously as water buffalo and bison regard the cowbird, the oxpecker, and the cattle egret -- that is, either not at all or as helpful distraction.

    As Al "Empire State" Smith would have said, regardless of InBev's market-dominance strategy, over-indulgence is a personal choice. Alcohol is more recreational in good times, but more therapeutic in bad. Therefore, segmental economic malaise (such as that that the Hostess employees are likely feeling) would have a greater impact on peoples' alcohol extent-use decision than InBev's distribution strategy.