LFMI‘s policy analysis of draft amendments to the Law on Alcohol Control

Continuing activities in the area of market deregulation, the Lithuanian Free Market Institute has analysed draft amendments on the Law on Alcohol Control and submitted its conclusions to relevant state institutions.

On correspondence between the goals and measures proposed in the draft law

All prohibitions laid down in the draft law are designed to reduce consumption of alcoholic beverages, especially by young people and adolescents, and so improve the general public health. This goal is understandable; it is also unquestionable that it’s imperative to solve particularly acute problems related with improper consumption of alcohol, for example, drink-driving, immoderate consumption of alcohol and the drinking by adolescents. The ongoing public debates demonstrate that the existing and the currently proposed measures have been tabled given the immense extent of the problem. However, the evaluation of these measures’ possible effects on the problem itself has not been fully completed and thoroughly discussed yet. The Institute therefore suggests taking heed of how, if at all, the proposed measures would contribute to attaining these goals and tackling these problems.

It should be noted that the recently adopted new restriction on advertising of alcoholic beverages, which has sparked heated debates and raised considerable doubts, has not come into effect yet. Similarly, the effectiveness of these measures has not been properly explored. It is scarcely expedient to put forth new measures of alcohol control without having conducted a detailed and complex evaluation of the roots of the problem itself. If the prohibition set forth in this draft law has been grounded on the belief that the current and soon-to-come-into-effect prohibitions are ineffective instruments, the latter should not be brought forward in general (since restrictions exist, but to no avail). Proposing yet stricter means of control before the recently adopted law takes effect shows that the Law on Alcohol Control is being amended without paying sufficient attention to the expediency and effectiveness of both the existing and proposed instruments.

The aim to curtail alcohol consumption without taking into account the culture of consumption isn’t well-directed. Decision makers skip the fact that there are at least two groups of consumers of spirits – consumers overusing alcohol or consuming alcohol inappropriately (these consumers are often the major factor behind the said problems) and consumers consuming alcohol moderately (they consume alcohol without overpassing social norms). It is commonly accepted that immoderate consumption of spirits prompts health and social problems. But modest consumption of alcohol in our society is a norm, and consumers have enough experience of life or theoretical knowledge about the potential damages to their health. For this reason, consumption of alcohol should not be demonised or restricted since there is neither scientific proof nor preconditions for state intervention.

The prohibitions laid down in the draft law have been tailored primarily for bridling immoderate consumers of alcohol, but they will affect both groups of alcohol consumers. The proposed prohibitions thus will become a burden on the part of those who consume alcohol moderately and those who offer products for that purpose.

Decision makers shouldn’t automatically dismiss the possibility that it is the reckless, rather than sound, fight against consumption of alcohol, coupled with negating the culture of alcohol consumption, that aggravate the problems (alcohol abuse, drunken drivers, the drinking by teenagers, etc.) South European countries have a rather deep-rooted culture of alcohol consumption but the problems we are now faced with are of a far less extent there compared to our country. This fact allows considering that the presumption (that imprudent fight against all forms of alcohol consumption may not just help but also impair health and social welfare) is highly reasoned.

The aspiration to control trade in, and advertising of, alcoholic beverages and so reduce consumption of spirits should be deemed as negating individual freedom and self-consciousness, since restrictions or prohibitions of alcohol trade and advertising originate from the belief that the individual lacks rationality, self-consciousness, self-responsibility or competence to make his/her own choices and be in full charge of his/her own actions. Just like in the case of immodest consumption of alcohol, such thinking seems to be only encouraging individual irresponsibility for own actions and their consequences.

Nearly all articles of the draft law are one way or another related with the introduction of new prohibitions or limitations of trade in, and advertising of, alcoholic beverages. However, there’s a problem that the more the trade in certain products is regulated and the more prohibitions related to that product exist, the greater incentives for satisfying this need through illegal or half-legal ways. Demand always engenders supply. If a desirable alcoholic beverage cannot be purchased legitimately, illegal ways for doing so will emerge. If official alcohol advertising is made impossible, this will significantly increase hidden advertising. The latter may result in a relatively bigger role being attributed to the quantity of alcohol, rather than to the image and quality of a beverage.

Alcoholic beverages are consumed not because they are sold or advertised, but they are sold and advertised because they are consumed. In other words, by proposing measures that would supposedly lead to a reduction of alcohol consumption, decision makers fallaciously perceive the relation between the cause and effect. When in the first half of the 20th century the United Stated adopted the notorious prohibition of trade in alcohol products, consumption of alcohol fell at the beginning of prohibition, but it subsequently increased; in addition, the consumption of more potent alcoholic beverages and various narcotics rose.[1] Alcoholic beverages were consumed not because they could or could not be purchased but because people wished to consume them, which led them to search for ways to satisfy this need.

The imposition of new prohibitions, which supposedly reduces the amount of alcohol consumed, decreases budget revenues while increasing budget expenditures because the demand for regulating and controlling these prohibitions rises. It also boosts the income of illegal traders in alcohol.

Ousting alcohol from the legal arena will increasingly diminish incentives for, and opportunities to, attending to its quality, and more incentives will prop up to sell it in a more potent form, resulting from the need to minimise risks per unit of degree.

On the requirement to trade in alcohol in specialised sections of stores

Article 1 Clause 1 of the draft law aims at permitting trade in alcohol only in specialised sections of stores that must be equipped with separate cash-registers. This will supposedly ensure that adolescents will not be able to purchase alcoholic beverages. However, adolescents already don’t have the right to purchase alcohol (especially in gas-stations that are usually being filmed twenty-four hours). Is there really any data, proving that after the elimination of specialised alcohol sections that once existed in Lithuanian stores the selling of alcohol to teenagers increased? Moreover, is it really true that young people are encouraged to consume alcohol when they see non-alcoholic beverages, tools for opening and closing bottles and similar instruments, the trade in which is planned to be prohibited in the specialised sections, placed next to alcoholic beverages? Therefore, it’s dubitable that the proposed measure will bring any benefits, but it will certainly encumber the shopping for ordinary citizens by forcing them to wait in separate queues at cash-registers plus it will cause additional costs to traders and, at the same time, to consumers.

On the prohibition to trade in alcohol in gas-stations

According to Article 3 Clause 1 of the draft law, trade in alcoholic beverages in gas-stations will be prohibited. But gas-stations in Lithuania sell a very negligible share of the total amount of alcoholic beverages sold in the country. That is why it shouldn’t be expected that after instituting the prohibition of trade in alcohol in gas-stations consumption of alcoholic beverages, or the number of drunken drivers, will drop – when there is demand but no possibility to purchase alcohol in gas-stations, alcoholic beverages will be obtained in other places.

Lithuania has already seen a period when trade in alcohol products in gas-stations was forbidden; currently it is allowed again. For this reason, prior to introducing the planned restriction again, it is necessary to provide evidence if there was any linkage between permitting trade in alcoholic beverages in gas-stations and the number of car accidents caused by drink-driving or the number of drunken drivers detained. It is strongly doubtful that the share of drunken drivers who appear to have purchased alcohol in gas-stations is considerable. If so, it’s also questionable that they wouldn’t have done the same thing somewhere else.

Following the logics of the proposal to prohibit trade in alcohol in gas-stations, trade in prepaid mobile telephone cards and newspapers should be also forbidden (as speaking on mobile telephones and reading when driving is not permitted); perhaps gas-stations should be even prohibited to trade in all other products (because when driving one must concentrate only on driving). As regards its contents, this proposal in the draft law does not comply with the principle set forth in Article 4 Clause 2 of the Law on Competition, stating that public authorities are prohibited from adopting decisions which bring about differences in the conditions of competition for competitors in the relevant market.

On the prohibition of trade in bear and cider in temporary places of trade

Article 3 Clause 2 of the draft law is aimed at prohibiting trade in bear and cider in non-specialised and temporary places of trade and kiosks. This prohibition would be logical in larger cities as social tensions usually emerge around places of trade there; however, it would be more appropriate to keep this regulatory function with municipalities. An absolute prohibition in the regions which have no other places of trade in alcohol in the thereabouts (e.g. rural areas) would directly prompt consumption of self-made, illegal alcoholic beverages.

On the prohibition of trade in alcohol in sanatoriums

According to Article 3 Clause 3 of the draft law, trade in alcohol would be prohibited in public catering establishments set up in sanatoriums where permits have been already granted by municipal councils. This poses a question as to whether divesting municipalities of this competence is justified – once a municipal council issued a permit to trade in alcohol products, is there any need for the Parliament or law to prohibit it? This prohibition may undoubtedly exert negative consequences on the competitiveness of sanatoriums attempting to find their niches of activity.

On the prohibition to consume alcoholic beverages in mass events

Article 4 Clause 2 of the draft law aims at prohibiting consumption of alcoholic beverages in premises where sports events, concerts and other mass events take place. This prohibition is likely to increase the number of spectators who, knowing that they will be disallowed to consume alcoholic beverages during the event, will come to events already intoxicated having consumed alcohol prior to the event.

On testing employees for insobriety

Article 5 of the draft law contains a welcome provision, stating that all employees may be tested for insobriety when there is reason to suspect they work being intoxicated. The Labour Code specifies that the employer may dismiss an intoxicated employee, and drunkenness is regarded a gross violation of the work regulations established at the workplace. However, the employer’s right to test his/her employees to see if they are indeed intoxicated has not been laid down in the law until now. The latter proposal would help to implement the provisions set forth in the Labour Code.

It would be expedient to apply this regulation also to those employees who drive vehicles. Currently, according to Article 26 Clause 1 of the Law on Alcohol Control, employers must ensure, that prior to a journey verification is done to see whether their employees, who drive the vehicles of undertakings, institutions and organisations, are sober (not drunk). No matter if this provision is adopted or not, employers have invariably been concerned that their employees who drive vehicles were sober during work time because intoxicated employees work less productively, they may injure other people or themselves, which would entail financial costs on the part of the company in case it had to indemnify for damages and would undermine its reputation. More to that, this provision would hardly lend itself to implementation, since not all employees start a working day in the territory of the company they are employed with where employers could test them. A number of employees driving their companies’ vehicles set forth to a journey straight from their homes or may start a journey in a foreign country or spend several days or weeks on a journey. Finally, this provision of the draft law is also senseless as it envisages a formal testing of employees for insobriety but it would fail to vouchsafe that employees stay sober after the testing is done. In other words, even with this provision in place, driving employees will not be prevented from getting intoxicated from alcohol after the testing is completed while employers will have to deal with yet another regulation impeding their business activity. After a formal testing is done, employers will nonetheless remain interested in ascertaining that their workers drive being sober. This poses a question as to whether such compulsory formal testing is needed at all.

Given these reasons, it would be expedient to adopt otherwise amendments to the Law on Alcohol Control – to unify the testing of both driving and not driving employees by eliminating mandatory testing and to specify employers’ right to test all employees for insobriety only under the suspicion that they work being intoxicated.

On absolute prohibition of alcohol advertising

Article 7 of the draft law lays down an absolute prohibition of alcohol advertising, expecting that this measure will decrease an overall amount of alcohol consumed, in particular that consumed by young people. However, this demonstrates entirely fallacious understanding of the purpose of advertising. The essential purpose of advertising is to promote certain products of one or another producer. By way of advertising, a company A seeks not to encourage consumers to buy a product B but to encourage consumers to buy a product B produced by the company A and so increase its market share.

To attain this goal, the company A attempts at creating a better product B as compared to the product B offered by any other company. Advertising is the only way to inform consumers that the company’s A product B is better than any other product B. Therefore, as a result of prohibiting advertising, the company A will loose motivation to improve the quality of its products because it will not be able to “boast” about its achievements to its consumers. In addition, prohibition of advertising will demotivate the company to improve and enhance its product. Prohibition of advertising causes stagnation of the market share occupied, so the company will simply face no pressure to improve its product as the major instrument in the battle of competition will be disallowed. Moreover, it is likely that when, as a result of forbidding advertising, possibilities to shape the image of alcohol consumption diminish, the culture of consumption and the quality of alcohol products will drop while their potency will increase.

The statement that advertising of alcoholic beverages impels the consumption by young people is tantamount to the statement that advertising automobiles induces adolescents who have no right to drive to steer a car. Young people consume alcoholic beverages not because alcoholic beverages are advertised but for an array of other different reasons: young people usually manage to find ways to obtain alcoholic beverages, their friends may be consuming alcohol or encouraging them to consume as well, alcohol may be consumed by people in their closest environment (e.g. parents) or they may have chosen to drink alcohol as a form of protesting.

Young people consume alcohol despite prohibitions set forth in laws. Thus, alcohol advertising is not the root cause of the genuine problem – the irresponsible youth simply want that alcohol. The prohibition of advertising of alcoholic beverages merely seeks at removing the factor which has actual influence on the consumption of alcohol among youngsters. But this one factor is neither sufficient (alcoholic beverages need yet to be purchased somewhere) nor indispensable (alcoholic beverages will be consumed all the same, despite prohibiting advertising).


The goal of the draft law analysed in this material is to curb demand (to reduce the amount of alcoholic beverages consumed and so improve the general public health); the aim of the proposed measures is to undercut supply (to introduce new restrictions on, and prohibitions of, trade in alcoholic beverages and their advertising). However, in the economy, demand causes supply, not vice versa, as it is presupposed in the draft law. For this reason, the draft law runs counter to the principle of expediency – the measures proposed are neither indispensable nor pertinent for the achievement of these goals.

Given all these reasons, it would be expedient to withdraw the proposed amendments to the Law on Alcohol Control from the draft law and to assess the expediency and efficiency of the existing and soon-to-become-effective measures restricting alcohol trade and advertising as well as the causes of problems related with alcohol consumption. Only when this assessment is done, the decision should be taken as to whether it is really expedient to amend the Law on Alcohol Control by imposing new restrictions and prohibitions or whether modifying the existing provisions will suffice.

[1] Thornton, M. 1991. Alcohol Prohibition Was a Failure, Policy Analysis 157. [URL]: http://www.cato.org/pub_display.php?pub_id=1017&full=1