BACKGROUND: On July 1st, 1999, the spirits market in Switzerland was reformed based on the World Trade Organization (WTO) agreement. The tax reform, in addition to increased competition, has resulted in a 30-50% decrease in price for foreign spirits (liquor). The purpose of the present study is to examine whether decreased prices due to the tax reform and the liberalized spirits market in Switzerland have had an effect on spirits consumption, and whether the effect differs by demographic and other correlates. METHODS: The present study uses data from a longitudinal study on changes in alcohol consumption in Switzerland's resident population. The baseline survey was conducted 3 months before the tax reform and the follow-up was conducted 28 months after the tax reform. A randomly selected sample of 4007 residents aged 15 years or older participated in the baseline survey and 73% in the follow-up survey. The data were obtained by computer-assisted telephone interview, including detailed questions on alcohol consumption, drinking habits, problem drinking, purchase of spirits and socio-demographic characteristics. RESULTS: Consumption of spirits increased after the price of spirits decreased. The increase in spirits consumption was consistent across subgroups, with the exception of the group aged 60 or older. Moreover, the increase in spirits consumption persisted even after adjustment for significant correlates of spirits consumption. Apart from age, there was no evidence that the increase in spirits consumption differed between subgroups as defined by sex, region, working status, education, smoking, drinking frequency, or average number of drinks. CONCLUSIONS: The findings demonstrate that younger people are more affected by price than older persons. This study demonstrated that price should be considered an effective policy to reduce alcohol misuse and alcohol-related problems, especially among the younger population.