NATIONAL COUNCIL ON ALCOHOLISM AND DRUG DEPENDENCE - NEW JERSEY ALCOPOPS: DISGUISED DANGER

Transcription

1 NATIONAL COUNCIL ON ALCOHOLISM AND DRUG DEPENDENCE - NEW JERSEY ALCOPOPS: DISGUISED DANGER

2 ALCOPOPS The costs associated with underage drinking of alcopops in New Jersey, whether calculated in dollars, in lives, or harm caused, are enormous. This troubling and widening fallout from alcopops creates a pressing need to reduce their consumption by the state s youth. Increasing the tax rate of alcopops so they are taxed as liquor will serve as a price disincentive to youth and thus would reduce alcohol consumption and alcohol-related problems among the state s youth. It would also go a long way in funding much needed alcohol education, prevention and treatment programs in New Jersey. Taxing alcopops at the same rate as liquor would produce additional revenue of $15.7 million for the state of New Jersey. 1 avings By Correctly Taxing Alcopops 2 $Youth Violence $ 101,563,000 Youth Traffic Crashes $ 58,052,600 High-Risk Sex, Ages $ 23,839,200 Youth Property Crime $ 11,303,600 Youth Injury $ 7,330,400 Poisonings and Psychoses $ 3,249,400 FAS Among Mothers Age $ 3,880,800 Youth alcohol treatment $ 5,682,600 TOTAL $324,428,600

3 NEW JERSEY S YOUTH DRINKING EPIDEMIC Underage drinking in New Jersey is on an epidemic scale. Approximately 395,000 underage youth in New Jersey drink each year. 3 In 2005, underage drinkers consumed 17.3% of all alcohol sold in New Jersey, totaling $852 million in sales. These sales provided profits of $413 million to the alcohol industry. 4 New Jersey s youth continue to use alcohol at rates that should alarm all concerned citizens in the state. Alcohol continues to be the most frequently used drug by New Jersey middle school and high school students. Almost 39% of New Jersey s middle school students have used alcohol in their lifetime, and 17.3% drank one or more drinks in the past 30 days. 5 Tragic health, social and economic problems result from the use of alcohol by youth. Youth are particularly vulnerable to harms associated with alcohol. It not only affects their development 6 but they experience high rates of alcoholic-related violence, motor vehicle accidents, assaults, homicide, suicide, traumatic injury, drowning, burns, property crime, high risk sex, fetal alcohol syndrome, alcohol poisoning, and need for treatment for alcohol abuse and dependence. 7 Young people who begin drinking before age 15 are seven times more likely to develop alcohol dependence and are two and a half times more likely to misuse alcohol later in life than those who begin drinking at age It is estimated that teenage girls who binge drink are up to 63% more likely to become teen mothers and at three times the risk of thinking about or attempting suicide than girls who never drink alcohol. 9 Annual Teenage Use of Alcopops: Each year, approximately 154,050 youth in New Jersey drink alcopops 49.3% of teenagers and 65% of 12th graders have drunk alcopops Between 17.2% 12 and 47% 13 or between 57 million and 1.5 billion gallons of alcopops are consumed by underage drinkers in New Jersey 14 The cost of underage drinking consumption of alcopops in New Jersey is $246,820,000 Underage alcopop consumption contributed to 13 deaths in New Jersey Underage alcopop consumption contributed to 9,583 incidents of harm in New Jersey The percentage of girls who reported that an alcopop was the last alcoholic drink they consumed increased from 14% to 62% 16 Around 70-80% of alcohol consumed by year-olds is in the form of alcopops

4 ALCOPOPS The Alcohol Industry Admits... Marlene Coulis, Director of New Products, Anheuser-Busch, quoted in Advertising Age, April 22, Trish Rohrer, Brand-Development Manager, Boston Beer Company, quoted in Restaurants USA, May 2002 (Source: AMA Alcopops and Girls Fact Sheet) 18 Terry Hopper, National Sales Manager, Sublime Hard Lemonade, quoted in Washington Post, September 13, 2000 The beauty of this category [alcopops] is that it brings in new drinkers, people who really don t like the tastes of beer. With younger drinkers, their palates haven t quite matured yet to drinks like bourbon. Malternatives are a sweeter drink, they re easier to drink and it takes less time to mature to the taste. This is the perfect bridging beverage [between carbonated fruit juices and the new hard lemonades].

5 What Are Alcopops? The industry terms them as flavored malt beverages, also known as malternatives or alcopops. They are sweetened alcoholic beverages that are bubbly and fruit-flavored, resembling soda, lemonade, punch or tea. They are made to taste like cola, soda pop, punch, or lemonade and have between 4-8% alcohol by volume. They actually have no traditional beer or malt beverage characteristics. The sweetness and flavoring hide the taste of alcohol and thus serve as a transition between soda pop and alcohol for young drinkers. 19 Alcopops comprise more than 100 brands and brand extensions including some popular ones such as Smirnoff Ice, Skyy Blue, Stolichnaya Citrona, Bacardi Silver, Jack Daniel s Original Hard Cola, Captain Morgan Gold and Mike s Hard Lemonade.

6 ALCOPOPS Although these products derive much of their alcohol from distilled spirits and are often branded with spirit names, the alcohol industry calls them flavored malt beverages because it wants to take advantage of more favorable tax rates and guidelines for beer, but doesn t want them to taste like, look like, or be called beer. 20 In New Jersey, beer tax rates are significantly lower than the rate for liquor: $0.12 a gallon for beer compared to $5.50 a gallon for distilled spirits. In other countries, manufacturers do not call alcopops malt beverages. Instead they proudly market their products as containing spirits. For example, while Smirnoff Ice is touted for containing vodka in the United Kingdom, the exact same brand in the U.S. is labeled as a malt beverage. 21 Why is it important to address the classification of Alcopops? In several states that have definitions of beer and liquor similar to New Jersey s, it was found that the production of Alcopops did not fall within the definition of beer, but fell more squarely within the definition for Whether or not alcopops are classified as beer, liquor, or their own category determines where they may be sold and at what rates they should be taxed. Underage consumption of alcopops can be greatly decreased by subjecting them to the guidelines established for liquor rather than beer in terms of advertising, taxation, and marketing. Properly classifying alcopops and taxing them at the same rate as liquor will have a huge impact on (1) who is drinking them, (2) who is responding to their advertisements, and (3) who is affected by the tax rate. When alcohol costs more, youth drink less, and fewer of them die, get into fights or commit suicide. Properly classifying alcopops can reduce underage consumption of all alcohol by 23%. 23 distilled spirits. 22

7 Who is drinking Alcopops? Teenagers. Underage drinkers consume as much as 17.3% 24 of all alcohol and 47% of all alcopops sold. 25 Alcopops promote underage drinking by acting as a conduit from soft drinks to alcohol. The alcohol flavor is masked by sweeteners and young people report drinking alcopops because they are easier to conceal and go down easy. 26 Adults drink only half the quantity of alcopops as drinkers under the age of 21. In a study from California, it was found that young drinkers age 12 through 20 consume an average of five and a half times as many alcopops as their adult counter parts. In total, underage drinkers consume 47% of all the alcopops in California. 27 Teen girls are particularly vulnerable to alcopops and reported drinking them more than other alcoholic drinks. The American Medical Association surveys provide insights into the resulting harms arising from alcopop consumption. The survey found: Nearly one in six teen girls who have drunk alcopops in the past six months have been sexually active after drinking. One out of four teen girls who have tried alcopops have driven after drinking or ridden in a car with a driver who had been drinking. One out of five teen girls who have tried alcopops have thrown up or passed out from drinking. Underage Alcohol Use Within the Past 30 Days by Alcohol Category Grade Beer Wine Spirits Alcopops 8th 12.8% n/c n/c 12.9% 10th 24.8% n/c n/c 23.1% 12th 38.0% 14.4% 36.4% 30.5% Source: Johnston et al., 2006

8 ALCOPOPS Who is being influenced by the marketing of Alcopops? persons (particularly girls), and that underage drinkers have developed a taste for these sweet alcoholic drinks. 28 A study released by the Center for Alcohol Marketing and Youth revealed that girls were exposed to and saw 95% more magazine ads for alcopops than women over 21. They also had 48% more exposure to beer advertisements, and 20% more exposure to distilled spirits advertisements. 29 Again, teenagers. Typically alcopops are marketed to look like familiar drinks to kids. They come in colorful child oriented packaging and are made to look fun, sexy and cool. While the alcohol industry claims that its intended audience is legal-age drinkers (ages 21-30), studies confirm that much of the advertising for these products is directed at impressionable underage The same pattern exists of overexposure of children relative to adults for radio and TV advertising. Women 21-34, the age group identified as the target audience for alcohol ads, were actually less exposed per capita to magazine advertising for alcopops and beer than girls The American Medical Association (AMA) expressed concern that hard-liquor brands are using these sweet-flavored malt beverages as gateway beverages to attract less-experienced drinkers. Who is being influenced by taxing Alcopops as beer and not as liquor? Once more, it s teenagers. A policy is necessary to make alcopops less attractive to young people. As one of the most price-sensitive groups of consumers, 31 targeted taxation increases are one important way this can be achieved. Make it harder for young people to afford alcohol and they will drink less. Numerous studies indicate that increasing alcohol taxes is an effective means of deterring and reducing youth alcohol use. 32 Raising excise tax rates, and hence prices, is a strategy that has strong and well-documented prevention effects on underage drinking. 33

9 In New Jersey, taxing alcopops at the rate of liquor will reduce overall consumption by 510,000 gallons, or 15%, and beer consumption will expand by 302,000 gallons. 34 Because they are so price sensitive, youth consuming alcopops will decline even more dramatically than is seen with the general population and will occur without having them replace alcopops with other alcoholic beverages. 35 Reducing consumption of alcopops by youth by 15.4% translates into saving 20 young lives in a decade and preventing 15,174 incidents of harm, including youth violence, traffic crashes, high risk sex, injury, poisoning and psychosis, suicide attempt, over that same period. 36 How are Alcopops currently classified? The proper regulatory classification in the U.S. for these products has become a matter of policy debate in recent years. Other states have classified alcopops in one of three ways: (1) as beer, (2) their own classification, (3) or as liquor. jurisdiction regarding the classification of alcopops and that brewers, wholesalers and retailers must follow state laws on these issues, regardless of what standard TTB adopts. 39 The Final Rule promulgated by the Alcohol and Tobacco Tax and Trade Bureau (TTB) provides that alcopops with no more than 6% of alcohol may be treated as beer for federal tax and classification purposes, provided no more than 49% of the alcohol comes from distilled spirits. 37 It is critical to note that states are not required to follow federal law but may take a different view concerning the classification and taxation of these products and may reclassify alcopops in their own category or as liquor. 38 When it issued the 49/51% rule, the TTB expressly acknowledged that states have concurrent

10 ALCOPOPS Do Alcopops belong in the same class as beer for marketing, selling and taxation purposes? No. First, although alcopops are produced at breweries, their method of production differs significantly from the production of other malt beverages and beer. 40 Most of the alcohol in alcopops is not derived from fermentation of malt and grain. Testing by the federal government in 2003 found that the majority of the alcohol in alcopops comes from distilled spirits. 41 Alcopops are not a similar fermented malt beverage. Liquor, on the other hand, includes alcoholic beverages that contain any amount of distilled spirits or dilutions or mixtures thereof. New Jersey law requires alcoholic beverages that contain distilled spirits to be taxed at the higher rate of $5.50 per gallon. What can be done to correctly classify Alcopops? U.S. states have independent legal authority to classify alcohol products. Thus, each of the 50 states has its own laws that define the different categories of alcohol. Previously, states followed the federal rules in classifying alcopops as beer. However, due to the negative impact on underage drinking, several states have corrected the classification of alcopops either by regulation or by statute. These states have either (1) classified alcopops as distilled spirits or (2) statutorily created a new category of alcoholic beverages that would raise the tax and restrict the availability of alcopops to youth. Several states that have definitions for beer and liquor that are similar to the statutory definitions for these products in New Jersey have obtained decisions from their regulatory agencies or attorneys general holding that alcopops fall within the definition of distilled spirits and should be treated and taxed accordingly. For example,

11 Maine (Office of the Attorney General, 2007), California (California Notice of Proposed Regulations, 2007), and Utah (Utah Code) have decided to reclassify alcopops as liquor. 42 Attorneys general in at least four states (California, Connecticut, Maine, and Virginia) have concluded that alcopops were not consistent with their definition of beer but were more consistent with their definition of distilled spirits. Properly classifying alcopops will not only save young lives, but will yield $15.7 million in increased revenue. Protect New Jersey s youth from a disguised danger. Contact your legislators to properly classify alcopops, which will increase the tax and reduce youth use. Endnotes 1 New Jersey Office of Legislative services Fiscal Estimate 4/28/ % of costs associated with underage drinking in New Jersey 3 Underage Drinking Training Enforcement Center (UDTEC), Fact Sheet New Jersey, org/factsheets/newjersey.pdf 4 Id. 5 New Jersey Student Health Survey of Middle and High School Students, NJDOE, Division of Student Services, p. 10, 85, National Institute on Alcohol Abuse and Alcoholism Alcohol and Development in Youth - A Multidisciplinary Overview Volume 28, Number 3, 2004/ UDTEC 8 Substance Abuse Mental Health Service Administration, Start Talking Before They Start Drinking: A Family Guide ( Brochure_508final.pdf) 9 American Medical Association, Alcopops and Girls Fact Sheet 10 Using the Monitoring the Future Survey an average of 8th, 10th, and 12 graders who drink alcopops annually is 39%. 39% of 395, Monitoring the future National Results on Adolescent Drug Use, Overview of Key Findings National Institute on Drug Abuse, National Institutes of Health, U.S. Department of Health & Human Services UDTEC 13 Rosen, Simon, MA, Simon, Michele, JD, The Cost of Alcopops to Youth and California,2007 (citing the National Epidemiological Survey on Alcohol and Related Conditions 2001 (NESARC); National Survey on Drug Use and Health 2001 (NSDUH) and NESARC surveys 14 Multiplied 17.2% and 47% by total amount of alcopops sold annually (3.3 million gallons of alcopops are sold annually in New Jersey according to the Office of Legislative Services Estimate April 28, These figures are actually rather conservative estimates. While surveys show children as young as 12 drink alcopops, health and cost data is only available for youth over 14, so the real costs may be far higher. In addition, these figures do not factor in long-term effects of underage drinking, such as an increased likelihood of alcoholism later in life. More costs would also be expected from calculating harm from consumption of alcopops by those over 21, which represent about 53 percent of the total. 16 Doggett, Jennifer, Center for Policy Development, Alcopops Memo to the Senate (citing Australia National Drug Research Institute; National Health Survey; National Drug Strategy Household Survey 17 Id. 18 AMA Alcopops and Girls Fact Sheet 19 Rosen, Simon, Simon Michele, Alcopops in the United States state by state battle to end corporate tax fraud 20 Rosen, The Cost of Alcopops 21 AMA Fact Sheet 22 See e.g. 92 Op Atty Gen 47 (Maryland 3/5/08) 23 Rosen The Cost of Underage Alcopop Consumption 24 UDETC 25 Rosen, The cost of Alcopops 26 Rosen, The Cost of Alcopops 27 Id. 28 Resolution regarding the Sale of Alcopops ci.berkeley.ca.us/citycouncil/2005citycouncil 29 Center on Alcohol Marketing and Youth (CAMY). Overexposed: Youth a Target of Alcohol Advertising in Magazines. September 24, AMA Alcohol and Girls Fact Sheet 31 Young adults are more responsive to price increases than adults. (Chaloupka, F.J., Grossman, M. & Saffer, H. (2002). The effects of price on alcohol consumption and alcohol-related problems. Alcohol Research & Health. 26(1): Beer prices inversely correlate with youths decisions to drink (Cook, P.J. & Moore, M.J. (2002). The economics of alcohol abuse and alcohol-control policies. Health Affairs. 21(2): ); Frequency and quantity of underage alcohol consumption is inversely related to the price of alcohol.(grossman, M., Chaloupka, F.J., Saffer, H. & Laixuthai, A. (1994). Effects of alcohol price policy on youth: A summary of economic research. Journal of Research on Adolescence. 4(2): Cook, P.J. & Moore, M.J. (1993). Drinking and schooling. Journal of Health Economics. 12: In a survey of self-reported responses, high school students admit to reducing their overall alcohol use because of price increases (Lockhart, S.J., Beck, K.H. & Summons, T.G. (1993). Impact of higher alcohol prices on alcohol-related attitudes and perceptions of suburban, middleclass youth. Journal of Youth and Adolescence. 22(4): ); College students are less likely to transition from abstainers to moderate drinkers or from moderate drinkers to heavy drinkers if alcohol prices are high (Williams, J., Chaloupka, F. & Wechsler, H. (2002). Are there differential effects of price and policy on college students drinking intensity? Impact Teen. Research Paper Series, No. 16. January OLS 35 Rosen, The Cost of Underage Alcopop Consumption: in Germany, the government s survey of young people s consumption of alcohol found that not only did consumption of alcopops decrease dramatically after the tax rise but so did their consumption of beer, wine and spirits. Overall consumption of alcohol by people under 17 was found to have fallen by 23% leading the German government to conclude that the reduction in youth alcopops consumption had occurred without substitution to other alcoholic beverages. In addition to the German data, we find no evidence of substitution in the UK. There is no increase in the sale of beer, wine or spirits in the UK after the alcopop. 36 Id Fed Reg Id Fed. Reg Mosher, James F., JD, The CDM Group, Inc. Special Report Status of State Campaigns to Restrict the Availability of Alcopops February 10, 2009, The industry uses this complex production process for a single purpose: To gain the regulatory advantages associated with beer lower taxes and greater availability. In other countries that have differing licensing and taxation structures, the manufacturers produce the same product using a distilled spirit base and dispense with the charade of starting with beer and then removing all of the beer s characteristics before adding distilled spirits Op Atty Gen 47; U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau. Federal Register, March 24, 2003.Notice No. 4.Vol.68,No Mosher 2009

12 NEW JERSEY 360 Corporate Boulevard, Robbinsville, NJ (PH) (FX) This resource brochure was devleoped by NCADD-New Jersey in cooperation with the New Jersey Prevention Network and the Childhood Drinking (CD) Coalition. It has been made possible by a grant from the New Jersey Department of Human Services, Division of Addiction Services.