Booze costs more at state-owned stores: study
NEW YORK (Reuters Health) - U.S. states that have a monopoly over their liquor sales seem to charge slightly more for booze than so-called license states without such control, according to a new price comparison.
"We found that the average price of liquor is lower in license states. It was on average $2 lower per product, which is about a 7 percent difference," said lead author Dr. Michael Siegel, a researcher from the Boston University School of Public Health.
As of February 2012, 18 control states in the U.S. set the price of liquor sold to their retail stores, and 13 of those also set the price for the general public. The other states sell liquor licenses to private business owners, who set their own prices.
Generally, in states and areas that have considered putting control of liquor prices in the hands of private businesses, the public has supported privatization.
But, the researchers note that while control states tend to charge slightly more for liquor, they also make a lot more money from their liquor sales.
"When legislators look at privatization, they just don't know how they're going to make up the money," said William Kerr, of the Public Health Institute's Alcohol Research Group in Emeryville, California, who was not involved with the new research.
The new study, which compared the prices of 74 popular liquor brands between the 13 retail control states and 50 private stores in license states, found that prices varied by brand.
"You can see major differences, and I think it's particularly interesting to look at some of the popular brands. For example, if you look at Absolut vodka, there is about a $6 difference," said Siegel. "If you look at Skyy vodka, there is about a $5 difference."
But not all liquor prices were more expensive in control states. The researchers found that 21 brands were - on average - more expensive in license states.
Still, Siegel told Reuters Health that the average price difference between control and license states may be enough to influence how much people drink.
"There is convincing evidence in the literature that control states have lower alcohol consumption than the license states," he said.
Siegel and his colleagues also write that control states have been found to have lower rates of heavy drinking and underage alcohol-related deaths, but that may be due to other reasons, such as access to alcohol and law enforcement.
The ultimate goal of this research, according to Siegel, is to look at the brands of alcohol that teens drink the most of and see if that's related to its price.
While the researchers write in the journal Addiction that past studies have shown control states to have higher liquor prices, Kerr said this type of research is needed because prices change over time.
"There haven't been that many price comparisons. Here and there, there have been price comparisons, but the values are changing all the time," said Kerr.
The most likely reason behind the difference in price, according to the researchers, is competition.
Past research has found that license states tend to have more liquor stores in one area, which the researchers say would be expected to drive down prices.
The researchers also write that control states may have higher prices because they have costs to cover that aren't paid for by license fees or a liquor sales taxes - both of which are collected by license states.
However, the new study cannot say why the prices seem to be lower, or if there are any other factors that can explain the differences.
Still, past research has found that control states tend to bring in more revenue from their liquor sales.
"It's important to keep that in mind that the prices are a little bit higher, but if you look at the money (control states) raise, it's actually dramatically higher," said Kerr.
But control states still show interest in privatizing their liquor sales, including Washington, which was included in the study's control state group but has since converted to a license system.
Siegel said the current debate is over what will happen after the privatization of sales in Washington.
SOURCE: bit.ly/Vzyl8Q Addiction, online October 17, 2012.
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