Thursday, 8 November 2012

Pricing customers into the pub?

It seems to be believed in some quarters that introducing minimum alcohol pricing would be a way of redressing the balance between on- and off-trade consumption and encouraging people back into pubs. However, I really fail to see how in practice that is going to work. It’s hard to see how it would generate a single extra customer for pubs.

For a start, it’s fairly obvious that if you increase the price of A, but leave B the same, it doesn’t make B any cheaper, or give people any more money to spend on it. Perhaps it might lead the odd person to go back to B because A is no longer such an irresistible bargain, but on the other hand it will increase costs overall and potentially lead people to cut back on B.

Much of the rhetoric surrounding minimum pricing concerns problem drinkers downing dirt-cheap white cider, super lagers, budget vodka and the like. While it would undoubtedly raise the price of their favoured tipple, is it really going to persuade them to start using pubs instead? And would the pubs want them anyway? On the other hand, before discounting, the price of most mainstream branded alcoholic drinks is already 50p or more a unit anyway, so it will make no difference whatsoever.

Obviously it would affect the price of some products, particularly those being discounted, but even so they would still be markedly cheaper than the equivalent in pubs. No doubt it would to a small extent cut overall consumption, but folks aren’t suddenly going to stop “pre-loading” because the price of Glen’s Vodka has gone up to £14 a bottle.

As I’ve posted before, the reasons for the rise of the off-trade relative to the on-trade lie in a variety of social changes over the years that go well beyond price alone. It isn’t a simple either-or choice as to whether to drink at home or in the pub – you need an actual occasion to prompt you to go to the pub. Even if beer was £1 a pint, pubs wouldn’t be doing anything like the trade they were in their heyday of the late 70s and early 80s. Plus, as someone once said in the comments here, “I don’t care if they’re giving the beer away if I have to stand out in the street to drink it”.

It’s also often hinted that all this is something that has been brought about as part of a deliberate policy by the major supermarkets. However, in reality, while they may be able to tweak customer preferences to a limited extent, supermarkets can only sell what people want to buy. They are, by and large, responding to consumer demand, not creating it out of thin air. If they really could manipulate the market to the extent that is suggested, then they would have discovered the Holy Grail of business. As the market for off-trade drinks has grown over the years, supermarkets have, understandably, devoted more shelf space to them and come up with more varied and innovative offers to attract business from their competitors.

And to claim that ordinary people are such dupes that they are wide open to manipulation of this kind is the kind of grossly patronising, élitist attitude all too typical of the anti-drink lobby and all their Righteous brethren. The stupid plebs need to be told what to eat and drink by their betters.

It’s also worth adding that, within the past week or so, I’ve had the opportunity to drink cask beer in a pub at less than 50p/unit, although I didn’t avail myself of it.

Incidentally, here’s another sceptical article about minimum pricing from licensing law expert Peter Coulson.

4 comments:

  1. Hmmm, so basically what we're ruminating is what is the cross price elasticity of demand between supermarket booze and pub booze?

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  2. And to what extent is one a direct substitute for the other anyway?

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  3. Glens vodka is a product for Alkies. The young who may or may not pre load before a night out are on the Smirnoff, being a tad more brand conscious. Sticking a £10 bottle up to £14 won't get them into bars earlier in the evening, for £8 cocktails.

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  4. I bow to your superior knowledge of alkies' drinking preferences...

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