Alcohol Retail Monopolies: Regulations and Public Health Concerns

Alcohol Monopolies, Regulations and Public Health Concerns

Alcohol monopolies can provide an effective balance between public health and safety concerns, fiscal interests and quality customer service.  However, the struggle between commercial agendas (e.g., product promotion) and health and safety considerations determines whether that balance is achieved. Under the current system in Ontario, the provincial government has the potential to control problems and reduce drinking-related harm.  However, given the strong orientation to promotion and marketing agendas in recent years, there are concerns about how much priority is currently being given to the harm reduction agendas of alcohol control systems.

Over the past decades, Ontario has seen a number of changes involving greater access to alcohol, including, for example, an increase in the number of retail outlets, longer hours of sale, and sale of alcohol on Sundays in retail stores.  In recent years there have been changes which have included, for example, bar hours extended to 2:00 a.m., liquor and beer store hours extended to include opening on Sunday, no restrictions on the amount of alcohol in a drink, stadiums allowed to have alcohol in the bleachers, and elimination of the pre-approval process for alcohol advertising. Considered separately, some of these changes may seem inconsequential, but together they send the message that alcohol is like any other commodity and that greater promotion of alcohol and drinking and easier access do not involve any significant health or social risks.   These experiences in Ontario suggest a persistent shift away from health and safety considerations, as former control functions are downgraded and commercial and marketing agendas are increasingly more dominant.

Several underlying factors have contributed to these changes in Canada's alcohol monopolies: the perception that the private sector is a major competitor with the public sector in alcohol retailing and distribution; the threat of privatisation; the assumption that customer demand for greater convenience and service is limitless; and the expectation that alcohol sales should generate more revenue each year.

There are four linked risks associated with the shift in mandate and orientation toward commercial agendas.  First, an increase in access to alcohol leads to the 'normalization' of alcohol use, thus increasing the perception that risks associated with drinking are modest and inconsequential.  Second, an increase in access to alcohol is likely to lead to an increase in per capita consumption (e.g., Edwards et al., 1994; Holder et al. 1995; Holder, 2003).  Third, as per capita sales increase there will likely be an increase in mortality and morbidity associated with drinking (e.g., Edwards et al., 1994; Xie et al., 2000; Norström, 2002; Ramstedt, 2002c).  Fourth, this shift in orientation erodes the attention due to an important agenda and function of the control system, devalues some of the prevention strategies noted above, and hampers the ability of the government and its partners to respond effectively to alcohol problems.  Considered together, these changes promote higher rates of alcohol consumption and higher rates of drinking-related problems.

Commercially driven changes are likely to conflict with the goal of controlling rates of alcohol consumption in order to decrease alcohol-related problems. It is important to routinely review and revise monopoly policies and practices in light of this important goal. More attention and resources need to be directed to health and safety concerns at the population level, and innovative ways sought to provide consumer convenience without increasing alcohol-related problems.  When involved in prevention and control initiatives, monopolies need to direct more attention and resources to those interventions that have a demonstrated potential to curtail overall consumption and reduce drinking-related harm, and less attention to those with little potential to reduce drinking-related harm (see Babor et al., 2003).

What can be done to insure that harm reduction and health promotion agendas are fostered by alcohol monopolies?  First, it is necessary to note that alcohol sales and harm reduction are not necessarily divergent agendas.  It is feasible to provide alcohol in a socially responsible way without increasing per capita consumption or increasing the risk of drinking-related harm as long as key principles are maintained. Second, it is important that the principle of balance between economic and health interests be central to alcohol management.  Third, in order to reduce drinking related harm, it is essential that promotional, marketing and alcohol management strategies be assessed from a public health perspective as to whether they will increase or control the inherent risks of alcohol distribution.

Fourth, several options for enhancing health promotion and harm reduction, outlined below -- using effective policies and a monopoly system - are recommended for higher priority than is currently the case. There are various strategies that are particularly accessible to an alcohol monopoly system that also fit in with their long-standing mandate.  Some of these strategies include: (a) monitoring trends in per capita sales and taking steps to insure that they do not increase; (b) controlling the price of alcohol to insure that it does not decline relative to the cost of other goods and services; (c) limiting the number and location of retail outlets and on-premise venues such as bars; (d) limiting hours of operation; (e) curtailing and scaling down aggressive promotion and social marketing of alcohol products, and (e) preventing sale to minors, intoxicated persons and third parties who sell or give alcohol to minors or the intoxicated.  While there is some attention to the last point, in light of recent developments it is clear that greater attention needs to be devoted to all of these aspects of alcohol management.
 
These policy or regulatory interventions have been linked to lower levels of alcohol-related problems. Research has shown that as the price of alcohol decreases and the number of outlets and days and hours of operation increase, so do rates of problems such as alcohol dependence, liver cirrhosis, traffic crashes, arrests for public drunkenness and drinking-related violence (e.g. Chaloupka, 1993; James, 1994; Österberg, 1992; Scribner et al., 1994; Smith, 1992; Xie et al., 2000).   Regulations that limit availability of alcohol and control prices play an important role in reducing alcohol consumption and related harm. A monopoly system has the regulatory power and orientation to promote these measures and to do it in an efficient way.
 
Monopolies can also contribute to social responsibility. Underage and young-looking adults have been shown to have a good chance (over 50%) of purchasing alcohol from private retailers in Wisconsin, Minnesota, Australia and Switzerland (Forster et al., 1995; Schofield et al., 1994; Vaucher et al., 1995).  In the Swiss example (Vaucher et al., 1995), more than 80% of underage drinkers were served.  In Ontario, every LCBO retail store employee and LCBO Agency store staff who serves the public takes a mandatory responsible service training program.  Every challenge and refusal is recorded.  In fiscal year 2001-2002, store staff challenged 1.2 million potential customers and 76,000 were turned away because they could not provide valid proof of age or because they appeared to be intoxicated.
 
In principle, either a fully privatised system for alcohol retailing or a government-run system may serve social responsibility functions.  In practice, this will depend largely upon the rationale for the system and how it works.  As noted above, under a privatised system there tend to be fewer incentives and checks and balances to insure that high priority is given to control and social responsibility agendas.
 
A system of government-run stores provides a readily available, cost-effective setting for distribution of health-related educational materials and campaigns about issues such as drinking and driving.  In general, because of their centralised administration and ability to undertake initiatives that do not directly contribute to profits, provincial retail monopolies are in a better position than private-sector systems to undertake harm reduction activities.

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