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New Report! 9/03
Landmark report and
call for action by the NAS 9/03 read overview here
July 11, 2003 WASHINGTON -- A fierce lobbying
battle has erupted over a yet-to-be-released report by a federal
panel that is considering stiffer excise taxes and new marketing
restrictions on beer and alcohol as part of a national effort to
curb underage drinking.
Congress last year asked the National Academy
of Sciences to recommend regulatory and policy strategies to limit
youth drinking, which is viewed as a major public-health problem
that leads to drunk driving, sexual assault and adult alcoholism.
The 12-member panel is expected to disclose its findings as early as
next month, and the study could have significant influence since the
academy is widely seen as representing scientific consensus on
public-policy issues.
The group's recommendations are still
undergoing the academy's review process and could change. But people
briefed on its deliberations say the panel is likely to call for a
comprehensive federal strategy to target underage drinking,
including higher excise taxes and limits on advertising, as well as
tougher enforcement, new rules restricting youth access to alcohol
in retail stores and, possibly, a media campaign aimed at parents.
Lobbyists for the beer industry have pressed
Congress and the administration to be allowed to review its findings
before the study is released and are challenging the objectivity of
the publicly funded panel, whose members were chosen by the science
academy. Industry officials also assert that the scope of the
academy's study has gone well beyond what Congress wanted it to do.
The beer and liquor industries say that they
support the fight against underage drinking, even as they argue that
the numbers are declining. "Obviously it's of great concern to all
people in the beverage alcohol industry," said Frank Coleman, senior
vice president of the Distilled Spirits Council of the U.S. "We
spend a lot of money fighting underage consumption, millions of
dollars a year."
But the industry is vehemently opposed to many
proposed solutions, such as new excise taxes, advertising
restrictions or efforts to limit access to alcohol in retail stores.
"The panel has paid little attention to developing real solutions
such as increased involvement by parents, peers, teachers and
community leaders" and enforcing existing laws, said David Rehr,
president of the National Beer Wholesalers Association. "It's a
nightmare of government gone awry, unlikely to yield a credible
study Congress can rely on," he added.
The Beer Wholesalers recently gathered the
signatures of 134 members of Congress who sent a letter warning the
academy against embracing "new and untested theories" that could
harm the industry. The Bush administration has also weighed in on
the side of the industry. An official of the Department of Health
and Human Services wrote to the academy earlier this year asking it
to include the industry in the review process before the study is
released. This brought a sharp rebuke from a Senate committee, which
said in a formal legislative report earlier this year that it was
"troubled" by the agency's attempt to inject "involvement of groups
with potential conflicts of interest" in the study.
George Hacker, director of alcohol studies at
the nonprofit Center for Science in the Public Interest, condemned
the wholesalers' "thuggish behavior." He said they were opposing the
study because they "stand to lose some of their franchise on
underage drinkers who consume, according to some studies, as much as
20% of the alcohol consumed in the U.S."
A spokeswoman for the National Academy declined
to comment on its findings and cautioned that they weren't yet
final. "It is still deep in review and will not be released for
another month or more," the official said. "We are equally
considering a full range of strategies." The official dismissed the
beer-industry lobbying and said, "the academy is confident in the
integrity of its work and its ability to be balanced and
independent."
"This isn't a political process, it's a
scientific review," one person close to the panel said. But he
added, "it's become politically sensitive" and its release has been
postponed, missing a scheduled June publication plan.
While several studies have found that underage
drinking has declined in recent years, it remains a major problem,
public-health officials say. According to a report by the Center on
Alcohol Marketing and Youth at Georgetown University, underage
drinkers constitute 12% of the total market, and half of all 12th
graders -- and 39% of 10th graders -- say they have had a drink in
the past 30 days.
Critics say the industry has encouraged
underage drinking with sexually suggestive ads aimed at youthful
audiences. One campaign that came under heavy fire in recent months
was the Adolph Coors Co. "Rock On" campaign that featured party
scenes and vivacious blonde twins in suggestive poses. Public-health
advocates say the ads cross the line because they depict a party
atmosphere that could appeal to youngsters and promote excessive
drinking.
Separately, the Federal Trade Commission is
investigating the industry's marketing of the new wave of flavored
malt-based beverages and whether they target the young. Its findings
are expected to be reported to Congress this fall.
In the quest to cut teenage drinking, the
suggestion of new excise taxes may be the most controversial element
of the panel's work. Members heard persuasive research that pricing
directly affects youth consumption, people briefed on the
deliberations said. Stiff excise taxes on cigarettes, for example,
have been shown to be effective in reducing smoking and have become
widely used as a public-policy tool.
One panel member is a Stanford University
economist and well-known expert on excise taxes, Philip Cook. In a
recent research paper, Dr. Cook and a co-author concluded that
"current excise taxes are too low, both nationally and in every
state. The rates are far less than the average social cost of each
drink consumed," in terms of health and other costs, the authors
found. "Raising the excise tax would be in the public interest."
But the alcohol industry is going through tough
times right now, and the industry will fight any suggestions of a
new tax. "Anheuser-Busch opposes excise-tax increases and believes
the most effective way to discourage underage drinking is to
encourage parents to communicate about this issue with their
children," said Anheuser-Busch Cos. spokeswoman Francine
Katz.
It is unclear how much of a tax, if any,
lawmakers would approve. The last time Congress raised the excise
tax on beer was in 1991, when it doubled the levy to $18 a barrel
from $9 as part of an overall luxury-tax increase. UBS Warburg
analysts estimate that, as a result, per-case prices rose by $1.50.
While some public-health advocates are calling for still higher
taxes, the beer industry continues to push for lower ones, and
currently has 152 sponsors in Congress for a bill that would roll
back that levy.
According to the Beer Institute, an industry
trade association, domestic beer shipments had fallen an estimated
2.6% year to date through April, compared with an estimated 2.1%
increase at the same time last year. Even imports are struggling, up
just 6% last year -- the slowest gain since 1992, according to data
from Beer Marketer's Insights, an industry publication.
Meanwhile, financially strapped states already
are looking at beer taxes as a way to raise revenue. More than 25
state governments proposed beer excise taxes this year, up from 16
in 2002. While most efforts were defeated, four states ended up
raising the taxes and about a dozen are still considering such
measures, including California, one of the largest markets.
Some lawmakers also have sought a national
media campaign against underage drinking. But evidence presented on
the effectiveness of such a campaign aimed directly at young people
was unclear, people close to the panel said. They said it is more
likely that the panel -- if it recommends an advertising campaign --
will suggest that it be aimed at parents and others who can counsel
adolescents on the dangers of drinking. Recent antismoking ads have
taken that approach.
Write to John R. Wilke at
john.wilke@wsj.com4 and Christopher
Lawton at
christopher.lawton@wsj.com5
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