How the US liquor industry is kept in check

January 28, 2013

Why is Britain in the midst of an alcoholism crisis whilst in the States teenage drinking is at an historic low? That’s the question Tim Heffernan begins this lengthy but fascinating exposition of the changing US and UK booze industries.

The reasons are many, but one stands out above all: the market in Great Britain is rigged to foster excessive alcohol consumption in ways it is not in the United States—at least not yet.

Monopolistic enterprises control the flow of drink in England at every step—starting with the breweries and distilleries where it’s produced and down the channels through which it reaches consumers in pubs and supermarkets. These vertically integrated monopolies are very “efficient” in the economist’s sense, in that they do a very good job of minimizing the price and thereby maximizing the consumption of alcohol.

The US market is much more inefficient, and has been (purposively so) since the end of Prohibition, with a combination of constitutionally-enshrined state regulation of liquor sales (limiting the potential for countrywide economies of scale) and a federally-enforced three tier system:

The idea is that brewers and distillers, the first tier, have to distribute their product through independent wholesalers, the second tier. And wholesalers, in turn, have to sell only to retailers, the third tier, and not directly to the public. By deliberately hindering economies of scale and protecting middlemen in the booze business, America’s system of regulation was designed to be willfully inefficient, thereby making the cost of producing, distributing, and retailing alcohol higher than it would otherwise be and checking the political power of the industry.

Things are changing in the US as two companies – Anheuser-Busch InBev and MillerCoors – work with big retailers to undermine intentional inefficiencies, but this great article nevertheless illustrates how far policy makers in the UK have to go.


Margins: Gladstone (IX)

January 25, 2013

I loved this glimpse into how William Gladstone spent the days immediately before presenting his first high stakes budget (as Chancellor) to Parliament, in 1853. One can only marvel at how times have changed.

Despite a lukewarm reception from his Cabinet colleagues…

Gladstone was undismayed. On the Sunday after the last of the five Cabinets [at which the budget had been debated] he went to church twice, wrote a small ration of letters … read Dante’s Paradiso, but [in his own words] ‘was obliged to give several hours to my figures.’

They who dare to commute

January 24, 2013

It’s delicious when a Big Company inadvertently reveals its true attitude towards its customers, thus confirming what everyone suspected all along. I spotted this corker today, on the ‘First’ ‘Great’ Western website explaining the delays bank holiday train travellers will encounter thanks to the ‘most intensive phase’ of work to overhaul Reading station, beginning this Easter:

Services from Bristol Temple Meads and South Wales into and out of London will be diverted via Banbury, adding around 1h 30mins to journeys.

However Passenger Focus research shows they prefer this to buses.

Customers travelling from the West of England may find it quicker to travel into London Waterloo.

Nate Silver on sport v. politics

January 11, 2013

Undisputed king of the 2012 US election analysts Nate Silver (who, can I just point out, I was trumpeting at least as far back as last January) followed Obama himself in taking part in a Q&A on Reddit. The quality of conversation was high – check out the full transcript here – and I particularly enjoyed Nate’s answer to the question ‘which do you find more frustrating to analyse, politics or sports?’:

Politics. I don’t think its close. Between the pundits and the partisans, you’re dealing with a lot of very delusional people. And sports provides for much more frequent reality checks. If you were touting how awesome Notre Dame was, for example, you got very much slapped back into reality last night. In politics, you can go on being delusional for years at a time.

Margins: Gladstone (VI)

January 11, 2013

Having revelled in Roy Jenkins’ biography of Churchill it’s no surprise to find his account of Gladstone’s life and times equally stuffed full of fascinating detail and faintly surreal episodes recounted with Jenkins’ characteristic wry humour.

But this absolutely has to take the biscuit: I learned today that in July 1849 Gladstone – that titan of Victorian politics – engaged himself in, to use Jenkins’ phrase, ‘a fresh burst of eccentricity verging on the unbalanced’.

When the Countess of Lincoln eloped to Italy with her new paramour Lord Walpole, she left behind one of Gladstone’s closest friends, to whom she had been married for seventeen years. Gladstone was rarely one to resist the urge to hold others to his high and exacting moral standards, so commenced to pursue the fallen lady first to Naples and then, when the couple bolted, on to Milan and then to Lake Como, with the intention of talking the Countess round to seeing the error of her ways and returning with him.

This principal objective – always fanciful – evaporated in Milan when Gladstone discovered the good lady was ‘with child’, so Gladstone settled for his back-up plan of being able to stand witness to adultery (although one presumes not in the biblical sense). Wishing to obtain firsthand evidence of Lady Lincoln’s purported pregnancy, the prime minister to be at one point disguised himself as a mandolinist in order to get near the villa in Como in which the couple were hiding out.

Who needs fiction when you have history eh?

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