By Evie Liu
The link between alcohol consumption and incidences of cancer has been known for decades. The latest warning from the U.S. surgeon general could bring a renewed focus on legislative efforts to reduce alcohol intake. But it would be a tall order.
In an advisory released Friday, Surgeon General Vivek Murthy named alcohol use a "leading preventable cause" of cancer behind tobacco and obesity, noting that alcohol contributes to nearly 100,000 U.S. cancer cases and roughly 20,000 cancer deaths each year -- higher than the 13,500 deaths caused by drunken driving.
Shares of Anheuser-Busch InBev, the maker of Budweiser; Molson Coors, the maker of Miller Lite; Constellation Brands, the distributor of imported Mexican lager like Corona and Modelo Especial; Sam Adams maker Boston Beer; and Brown-Forman, producer of Jack Daniel's whiskey, tumbled on Friday following the surgeon general's advisory.
Murthy is calling for a series of actions to increase public awareness of the health risk, including updates to the warning labels on alcoholic beverages. Alcoholic products already are subject to labels that carry the risks of drinking during pregnancy, while driving, or operating machinery.
Introducing more alarming labels would require approval from Congress, and it would be a challenging task. Alcohol companies and trade groups spend millions of dollars each year on lobbying to push for regulations that favor the industry.
Look no further than the tobacco industry. Cigarettes are required to have text-based warnings in bold, capitalized letters on the side of the packages. The Food and Drug Administration had tried to implement graphic warning labels for cigarette packages and advertisements like those in many other countries.
But tobacco companies fiercely opposed the move on the basis of freedom of speech, and they won in federal court more than a decade ago, preventing the graphic warning labels.
In 2023, total lobbying spending for the beer, wine, and liquor industry reached $29 million, roughly the same as the tobacco industry, according to research group OpenSecrets.
Another way to curb alcohol consumption would be to charge higher taxes that would make alcohol more expensive. Alcoholic beverages are subject to significantly higher tax rates compared to most other food and non-alcoholic beverages.
The federal alcohol excise tax, collected from manufacturers and importers of alcoholic beverages, totals $10 billion to $12 billion each year. The rates for pure alcoholic content of spirits, wine, and beer are 21 cents, 6 cents, and 9 cents per ounce, respectively.
Despite inflation and the rising prices of alcohol, those rates have remained largely unchanged since 1991, meaning the share of alcohol tax relative to the size of the economy actually has declined over time.
In 1940, alcohol excise taxes made up around 10% of federal revenue. By 2022, it accounted for only 0.2% of total federal receipts, according to a report in September 2024 from the Congressional Research Service.
In recent years, several states have implemented changes to their alcohol excise taxes, either increasing rates or considering reforms to address public health concerns and generate additional revenue. But resistance from the industry has always been strong.
Some states, such as Tennessee, Minnesota, and cities like Chicago and Seattle, also impose a special sales tax on alcoholic beverages in addition to the general sales tax, collected directly from consumers.
Last year, Chicago Mayor Brandon Johnson proposed a 34% to 36% per gallon increase in taxes on alcohol sales, but faced significant opposition from bars and restaurant owners, who said they already were struggling with rising costs and thin margins since the Covid pandemic.
It could be tough to impose stricter regulations on alcohol consumption, which is deeply ingrained in many cultures and often associated with celebrations and tradition. Overly restrictive measures could lead to public backlash and economic losses.
While tobacco is widely regarded as harmful even in small amounts, moderate consumption of alcohol often has been considered to have a low health risk. Some studies even suggest potential health benefits from red wine, although the credibility of such findings has been widely debated.
Prohibition during the 1930s in the U.S., when the production, transportation, and sale of alcohol was banned nationwide, has left regulators with cautionary tales. The period saw a proliferation of illegal bars, corruption among law enforcement officials, and a rise of organized crime.
Write to Evie Liu at evie.liu@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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January 04, 2025 12:36 ET (17:36 GMT)
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