Background

Alcohol price has often been found to be related to consumption and alcohol related problems. The price of alcoholic beverages may be influenced by a number of factors, including the amount of competition and the characteristics of people who live in the community, for example, their income and brand preferences. Understanding factors that are most influential in determining the price of alcohol can be important in preventing alcohol problems.

 

The Current Study

This study examines how prices for alcoholic beverages are set by on-premise outlets (bars and restaurants where alcohol is consumed on the premises) and off-premise outlets (grocery, liquor and other stores where alcohol is consumed elsewhere) in Alaska.
Data for the analyses came from a telephone survey of Alaskan retail establishments licensed to serve alcohol. This survey utilized computer-assisted telephone interviewing (CATI) techniques to collect alcohol-pricing information from alcohol retailers throughout the state of Alaska. Information about the economic and demographic characteristics of the community was based on census data.

 

Results

It might have been expected that areas that had a high density of alcohol outlets (that is, where outlets are close together) would have lower prices because of increased competition. This expected relationship was not found in the data. Outlet density was unrelated to price for both on- and off-premise establishments. It may be that more alcohol outlets are established where demand is already higher – thus reducing any potential effects of competition. The study did find that areas with higher incomes had higher alcohol prices – even for the same brands found in other areas. This may result from bars, restaurants and stores that have higher overhead and more amenities. Prices tended to be lower in areas that had a large population of young adults – consumers who might be more inclined to shop for lower priced alcohol. This may reflect the recognition by stores and bars that they can make higher profits by selling a greater volume of lower priced products.

 

The Take-Home Message

How alcohol prices are set in a given area is subject to a variety of factors and there is still much that we do not understand about how prices are set and how price influences the purchase of alcohol. While the relationships are not simple, the importance of alcohol price and outlet density in predicting alcohol use and problems should be recognized.

 

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