Supply and demand for alcohol in Australia: relationships between industry structures, regulation and the marketplace

Aspects of alcohol supply and demand relationships are examined in relation to the two main beverage varieties in Australia, wine and beer. It is argued that this case study illustrates how the 'supply side' is able to create and protect demand for alcohol through both taking advantage of and influencing government regulation of the market for alcohol. In relation to low alcohol beer the impact on public health and safety has been extremely positive. In relation to the creation of cask wine in the late 1960s there have been demonstrably deleterious effects. Preferential taxation arrangements for the Australian wine industry have dramatically increased both exports and home consumption. One unintended consequence has been the creation of a major new market for cheap bulk wines that have had a devastating public health impact, particularly on Aboriginal communities, and also the invention of 'alco-pops'. Two-thirds of all table wine consumed in Australia now comes in a cask and 90% of this product is manufactured by three multi-national companies that wield enormous power and political influence to maintain the status quo. The Australian beer industry is well known internationally for its export of 'full strength' (around 5% by volume) beers. What is less well known is its commercial success in the development of low and mid-strength varieties for home consumption. In some States these now comprise 40% by volume of the beer market. This development can largely be attributed to State taxation arrangements, to drink-driving law enforcement, marketing strategies and to a decade of intense competition between several major brewers. This case study indicates how alcohol taxation policy can have major impacts on public health (both positive and negative) but that in a modern market economy it is difficult for governments to act in the public interest due to pressures from vested interest groups.