Political involvement is a major driving force of potential issues for the future of the beer industry. The Government can have an impact on the beer industry using both legislative and non-legislative techniques to control the consumption of beer and other alcohol (Ministry of Justice, 2009). These techniques are all designed to reduce the amount of alcohol consumed in New Zealand, and therefore create a major issue for the New Zealand Beer Industry, decreasing the demand for beer in New Zealand.

 

Legislative Techniques:

 

There are a number of legislative techniques that are currently used by the government to control the promotion, sales and consumption of alcohol. The most pressing issues for the beer industry are outlined below. 

 

The Drinking Age:

 

Currently, New Zealand does not have a legal drinking age for alcohol, instead, there is a legal purchasing age. In order to purchase alcohol in New Zealand, you must be at least 18 years old, however, consumption of alcohol below this age is allowed if the alcohol is supplied by a parent or legal guardian (NZ Drug Foundation, 2009). This law is outlined in the Sale and Supply of Alcohol Act 2012, which came fully into force in December, 2013, updating the Sale of Liquor Act 1989 (Health Promotion Agency, 2014). Despite a recommendation from the Law Commission and calls from top New Zealand doctors to implement a minimum drinking age and raise the purchasing age of alcohol (Palmer, 2014), research shows that this is unlikely to occur within the next five to ten years due to the improvements seen from the recent act change (Priestley, 2015; Health Promotion Agency & Alcohol Healthwatch, 2015).

 

Best case scenario – The laws around the sale and consumption of alcohol in New Zealand do not change in the upcoming years.

 

Worst case scenario – A legal minimum drinking age is implemented and the minimum purchasing age for alcohol is increased.

 

Implications – In New Zealand, those within the age group of 18-24 years consume the highest percentage of beer in New Zealand (Ministry of Health, 2015). Therefore, the implementation of a legal minimum drinking age or an increase in the minimum purchasing age would have a large, negative impact on the beer industry, drastically decreasing the consumption of beer in New Zealand. However, the research conducted largely indicates that a law change regarding drinking age is unlikely in the upcoming years (Priestley, 2015; Health Promotion Agency & Alcohol Healthwatch, 2015), causing only a small likelihood of the worst case scenario occurring. Overall, the threat of a change in drinking age is moderate, as the potential impact is high, but the likelihood and uncertainty is low.   

 

Advertising Laws:

 

New Zealand has laws regarding the advertisement of alcohol, outlined in the Code for Advertising and Promotion of Alcohol.  This code contains four major principles, with firm guidelines that promote social responsibility, adult audiences, moderate consumption, and sponsorship (Advertising Standards Authority, n.d.). A report by the Law Commission in 2010 recommended a three step programme of further advertising interventions, implemented over five years (Ministry of Health, 2015). Positive response to this report saw the first stage of recommendations included in the Sale and Supply of Alcohol Act 2012, but some constraints were identified, preventing the implementation of subsequent steps. The approach by the Government now is to closely monitor the advertisement of alcohol, undertake further reviews, and pass further laws when necessary (Ministry of Health, 2015).

 

Best case scenario – Alcohol advertising laws are relaxed in New Zealand, allowing promotion to the desired target audience for beer consumption.

 

Worst case scenario – Further alcohol laws are implemented, decreasing or even eliminating the ability for promotion of the beer industry and advertisement of its products.

 

Implications – Research shows that the likelihood of stricter laws around the advertisement and promotion of alcohol in the upcoming years are high. An established programme has already begun to tighten the advertising laws, creating a high possibility of further changes. There are already current laws in place for the promotion of alcohol, for example, no advertising during prime time television, so tighter regulations will not hugely impact the beer industry (Advertising Standards Authority, n.d.). Although there is some reliance on current media advertising in the beer industry, in recent years it has reduced because of these laws, leading to a lower impact of potential law changes (Weir, n.d.). The likelihood of the introduction of tighter advertising laws is high, but the impact on the beer industry is lower, causing an overall low to moderate risk to the beer industry. 

 

Price Regulation:

 

Price regulation is seen to be an effective way to reduce the amount of alcohol purchased, as increases in price have strong links to decreased consumption (Ministry of Justice, 2013). Excise tax is currently collected by the Government on all alcohol products manufactured or imported into New Zealand. The average beer in New Zealand is only taxed at 10% of its retail price, which is considerably low when compared to the excise tax rates of other developed countries (Alcohol Healthwatch, 2009). Excise tax is an appealing option for the Government to control the consumption of alcohol as not only is the amount of alcohol purchased decreased, but the revenue for the Government is increased (Hartevelt, 2012). Other price controls, such as a minimum price are also options for the government to regulate alcohol consumption (NZ Drug Foundation, 2010). In the 2010 report for the Alcohol Reform Bill, the Law Commission recommended both an increase in the excise tax for alcohol and a minimum price control to be set (New Zealand Law Commission, 2010).

 

Best case scenario – No increases are made to the excise tax rates on alcohol in New Zealand, and no minimum price controls are set.

 

Worst case scenario – A large increase (such as the 50% recommended increase (New Zealand Law Commission, 2010)) is made to alcohol excise tax rates and a minimum price control is set.

 

Implications – By increasing the excise tax rates on alcohol by 50% as recommended by the Law Commission, an average 10% increase in the retail price of beer would be seen, reducing the expected consumption of beer by 5% (New Zealand Law Commission, 2010). An increase in tax rates not only increases the retail price for consumers, but also the cost of production for producers (Easton, 2005). Therefore, the worst case scenario regarding price regulations would have a large, detrimental impact on the beer industry, both reducing consumption and increasing the cost of production for brewers. However, despite strong recommendations from the Law Commission to implement stronger price controls, with 75% of submissions supporting an increase in the price of alcohol, drastic changes appear unlikely. A factsheet released in the months leading up to the Alcohol Reform Bill states “The Government was quick to reject any increase in excise tax.” (New Zealand Drug Foundation, 2010). Justice Minister, Judith Collins, in charge of the reform, (New Zealand Parliament, 2012) said, ”The Government had no plans to increase excise on alcohol.” (Hartevelt, 2012). The negative impact of harsher price regulation on the beer industry is very large, but the likelihood of changes to current price controls in the next ten years is low to moderate. The overall implications of price regulation on the beer industry is moderate. 

 

Non-legislative Techniques: 

 

Mass-Media Campaigns:

 

The use of mass-media campaigns to discourage the consumption of alcohol is widely used by the New Zealand Government. Multiple campaigns are run at one time, emphasising the Government’s message about alcohol consumption (Health Promotion Agency, 2015). The full effectiveness of these campaigns are not clearly known due to the difficulty of measuring their successes. However, these campaigns are shown to increase awareness of the risks associated with alcohol and help to reduce alcohol consumptions rates (The Tomorrow Project, 2015). These campaigns are often directed at the age group of 17-24 years as this bracket has been identified as the most problematic for our country (Downes, 2015).

 

Best case scenario – Mass-media campaigns are stopped as they reduce the consumption of alcohol promote the negative aspects of the industry.

 

Worst case scenario – Mass-media campaigns are continued and the frequency of advertising for these campaigns increases.

 

Implications – Although investigating the success of these campaigns is difficult, evidence has been found that shows this non-legislative technique is effective in increasing the knowledge of the risks involved with alcohol and helping to decrease the consumption of alcohol. This is especially a threat for the beer industry as there are campaigns specifically directed at reducing the consumption of beer (Health Promotion Agency, 2015). There is little information available on the future of mass-media campaigns in New Zealand, but it is likely they will continue in the future as they are an effective way of educating the public on the harms of alcohol. Overall, the impact of these campaigns on the beer industry is moderate, but the uncertainty of the use of this technique in the future is high, causing mass-media campaigns to be a moderate risk to the beer industry.