Doctor

International Journal of Drug Policy 12 (2001) 139– 152
www.elsevier.com/locate/drugpo

Supply and demand for alcohol in Australia: relationships
between industry structures, regulation and the marketplace
Tim Stockwell a,*, David Crosbie b
a

National Drug Research Institute, Curtin Uni6ersity of Technology, GPO Box U1987, Perth, WA 6845, Australia
b
Odyssey House ( formerly Alcoholand Drugs Council of Australia), Melbourne, Vic., Australia
Received 16 August 2000; accepted 6 March 2001

Abstract
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 takingadvantage 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 andhome 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 wieldenormous 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 developmentcan 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 publicinterest due to pressures from vested interest groups. © 2001 Elsevier Science B.V.
All rights reserved.
Keywords: Alcohol; Taxation; Wine; Designer drinks; Beer; Politics

1. Introduction

* Corresponding author.
E -mail address: tim@ndri.curtin. edu.au (T. Stockwell).

This paper presents a case study that illustrates how important and yet how difficult it
is to heed the following advicefrom the

0955-3959/01/$ - see front matter © 2001 Elsevier Science B.V. All rights reserved.
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T. Stockwell, D. Crosbie / International Journal of Drug Policy 12 (2001) 139 – 152

World Health Organisation on policy options
for the reduction of alcohol-related harm.
‘Any country, which intends to take the
prevention of alcoholproblems seriously
must ensure that in determining the level of
taxation, health interests are taken into
account’ (Edwards et al., 1994).

Some aspects of the relationship between
alcohol supply side structures and patterns of
consumer consumption will be explored in
relation to wine and beer consumption in
Australia over the past two decades. This
case study from one country will be used toillustrate the continually evolving and dynamic relationship between the supply of alcohol and demand, which is mediated by a
number of factors, including the prevailing
taxation and liquor licensing arrangements.
This relationship will be explored specifically
in relation to the success of three new alcohol
products, which have enjoyed a huge commercial success over this time period: cask...