Have you thought how social trends could affect your business?

I was once accused of being politically naive. Now I’m going to prove it — all under the guise of good management of course, but still in really scary territory. I’ve run the idea for this essay by a few of my colleagues and they’ve all indicated I’d be a lot safer picking on something a little less controversial. I suppose I would be.

Good managers look ahead

Will alcohol sales continue to be a money spinner?

I have always taught managers they are supposed to look ahead and plan for the future. There is a social issue that has been simmering below the surface for some time, but which very few of my clients seem to have considered in their forward thinking. I’m referring to government attitudes to alcohol consumption over the next twenty or so years. This might seem like a long time to worry about but you need to be prepared.

Now I’d better explain at this point that I’m no conservative when it comes to the consumption of bottled beverages myself. Basically I’m a hedonist and like nothing better than to heave the cork out of something old and delectable, then consume it with good food and interesting company. Ask anybody who knows me. On second thoughts, don’t do that — just take my word for it.

Legal precedents

What got me all started on this was the publicity about the senior executives of the Liggett tobacco company in the U.S. turning on their peers and spilling the beans on the tobacco industry’s nefarious deeds. For those of you who can’t remember the hoo-ha, I can summarise it quite simply: Twenty-two U.S. state Attorney Generals got the Liggett company by the short and curleys and offered them a deal from heaven. ‘Rat on the other tobacco companies and we’ll give you immunity from court actions for damages from smoking that would otherwise bankrupt your company and your family’s families for ever.’ Simple as that. Unsurprisingly, they sang like canaries.

This has come at a time when enlightened governments are desperately struggling for ways to lower the cost of health care. They appear to be cooling on the idea of reducing the budgets of health services like hospitals, rehabilitation centres and clinics; which traditionally have proved very difficult to reform, and are now working on the root of the problems that cause people to need those facilities — things like road trauma, smoking, alcohol and drug abuse.

Look at what has happened to the tobacco companies

tobacco

The price of alcohol will increase due to duties and taxes increasing

Smoking was the biggie. A powerful infrastructure has grown up around the battle with the tobacco companies. Fifteen years ago I wouldn’t have bet that I’d see the demise of the tobacco industry in my lifetime, but now it’s only a matter of time — the writing is on the wall in this country, as in other countries including the U.S. The trouble is, successful infrastructures like the smoking lobby seldom disappear after their need has diminished, because too many people stand to lose their entrenched positions of power and influence. The likely scenario is that they will move on to address other social issues.

The cost of road trauma is already reducing rapidly in Australia because it is an issue that is ideal to tackle with technology and one that the government gleefully derives a great deal of revenue from, in the form of traffic camera fines. The traumatic TAC ads we are used to see on television are another example of Government action in this area. Tackling drug abuse is very hard, because it is underground and highly profitable. By a process of elimination, excessive alcohol consumption is the likely next big target.

Will you continue to make good profits from alcohol sales?

Those with an interest in recent history will already be thinking: ‘We’ve already been down that path — prohibition of alcohol was tried in the U.S. earlier this century, and it failed’. True enough, but prohibition was driven by a Christian moralistic urge — ‘to curb the demon drink, and the lascivious and licentious behaviour that comes with it’. This time there is a more practical reason for looking at alcohol consumption — the rising cost of the health care system. Money is involved. Serious money.

I don’t imagine they’re going to ban alcohol or anything that radical, but I do think that the same methods that were applied to curb smoking are likely to be used to discourage people from excessive drinking — label warnings, advertising bans and greatly increased taxes. My years studying Law at Melbourne Uni also lead me to conclude that the same legal precedents that are being established in the smoking arena are likely to be persuasive when applied to alcohol. For example, it’s a short step from what is happening to the U.S. to the argument, in relation to the sale of alcohol: ‘You know it is addictive, therefore you are responsible for the damage it causes people’.

My intuition says we’ve got about ten years to plan for this before it will start to have an effect on the Australian hospitality industry. The argument that our governments need the revenue from alcohol taxes and are unlikely to bite the hand that feeds them is not very persuasive. It’s a matter of cost/benefit. What will they sacrifice in revenue, compared to what they save in health care costs?

Government

Watch out for the Government

Don’t think the Government won’t act

Our State Governments don’t seem hesitant to enforce drink driving laws, much to the detriment of the pub industry, and I don’t think they’ll think twice about introducing legislation that will hurt the hospitality industry if they think it will bring about a wider community benefit. I guess the best way to deal with the future would be to structure your business to be able to prosper without any profit from alcohol sales, then you’ll be safe, no matter what happens.

Me? I’m going to stockpile my favourite wines while I can still afford them. Imagine dragging a bottle of Grange up from the cellar, after paying $4,250 for a current release bottle because of punitive taxes, only to be confronted with a label that says: WARNING: DRINKING CAUSES LIVER DISEASE. It’d take a bit of the pleasure out of it, wouldn’t it?