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Pathological Drinking Drives Booze Industry Profits
August 2006

CASA Study Shows How at Odds Alcohol Industry's Interests Are With Public Health

Over the years, many in the treatment industry, clinicians and executives alike, have no doubt wondered to what extent the $130 billion a year alcoholic beverage business profits from the millions of pathological adult and underage drinkers who come through the doors at centers nationwide.

The question of how reliant the booze industry is on people who are addicted to its product for sales and profits has also been a critical one for addiction policy makers and activists, many of whom are interested in finding out just how sincere alcohol companies are when they urge people to "drink responsibly" while spending almost $2 billion a year advertising their alcoholic beverages, up over 70 percent in the last decade.

In May, Columbia University's Center on Addiction and Substance Abuse, CASA, the renowned addiction think tank, published a study proving that the alcohol industry has, at the very least, a strong financial interest in maintaining the current status quo when it comes to pathological adult and underage drinking, a finding that calls into question the sincerity of the industry's "drink responsibly" pronouncements.

In its report, The Commercial Value of Underage and Pathological Drinking to the Alcohol Industry, CASA estimates that, at a minimum, pathological drinkers and underage drinkers were responsible for approximately 38 percent of booze industry sales, which in dollar terms equaled almost $50 billion last year.

As the net profit margins of big brewers and distillers like Anheuser-Busch and London-based Diageo have tended to range from 10 percent to 15 percent over the longer term, according to analysts, it is very clear that success by the treatment industry, public health officials and prevention specialists in substantially reducing underage and pathological drinking would result in either a considerable hit to alcohol business profitability or a big downsizing of the industry. Since both of these are likely unacceptable outcomes for brewers and distillers - not to mention the host of marketing, distribution and other companies that rely on them - CASA sees disturbing implications arising from its study.

Saying that there is a very strong disjunction between the financial interests of the alcoholic beverage industry and the interests of public health, CASA President Joseph Califano points out that underage and pathological drinkers are the booze industry's best customers.

"It is reckless for our society to rely on an industry with such an enormous financial interest in alcohol consumption by children, teens, alcoholics and alcohol abusers to curb such drinking," says Califano, adding that self regulation by the alcohol industry is a "delusion" that society, which spends $140 billion a year dealing with the costs of alcohol abuse, can no longer afford.

Top public health officials, like U.S. Surgeon General Julius Richmond, agree. "Left unchecked, the alcohol industry stands to gain at least one-half trillion dollars in cash revenues over the next decade from underage and pathological drinkers," he says. "The industry's significant financial gains from underage and pathological consumers create a conflict of interest for the industry. The findings of this [CASA] study reveal a critical and urgent need for federal regulation of the alcohol industry."

And, certainly, the evidence that the alcohol industry is wanton in its disregard of responsible advertising policies is overwhelming. In the latest of a slew of recent damning reports showing the industry is disregarding its 2003 vow not to advertise to youths, Centers for Disease Control epidemiologists found that half of all alcoholic beverage ads aired on radio in 2004 were aimed at young people.

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