Saturday, 3 December 2016

Welcome to the Scrooge Arms

You must have been living in a cave if you hadn’t noticed that alcohol prices in the off-trade tend to be considerably cheaper than those in the on-trade. This has been the case for decades, and realistically is just a fact of life. Yes, over the years the differential has widened, but that has been as much due to pub prices rising above inflation than off-trade prices dropping. And obviously, as the off-trade accounts for a steadily growing share of consumption, the gap has loomed larger as a factor in the market.

Now parts of the licensed trade seem to have suddenly woken up to this fact and are having a good whinge about it. “They’re selling Carling for 64p a pint! How can I possibly compete with that?” The answer, of course, is that you can’t, you never have been able to, and you don’t have to. A pub is far more than just an alcohol shop, and to suggest that pubs are in direct competition with supermarket drinks is no more realistic that claiming that restaurants are threatened by cheap ready meals. As Cooking Lager rightly points out:

In reality, very little off-trade alcohol consumption is readily transferable to pubs anyway. It’s rarely a simple either-or decision. And to claim that raising off-trade prices would make people any more likely to visit pubs is delusional. Even if a 50p/unit minimum price was applied, that 64p pint of Carling would still be only £1.13, or a third the price in a pub. There’s still a massive saving to be had.

The Christmas and New Year season is also one where, more than any other, people will be looking to entertain at home, and to get the keenest prices on the food and drink they buy. If they go in a pub to find the owner bemoaning the fact that they’ve been able to get some bargains, they’re likely to see that as a distinctly Scrooge-like attitude. And how many pubs are open on Christmas Day evening anyway?

It’s also very wide of the mark to claim that such offers amount to “loss-leading”. Yes, profit margins for both brewer and retailer will have been pared to the bone but, as I’ve explained before, loss-leading just doesn’t work like that. To sell something that can account for a substantial proportion of a typical trolley-load at an actual loss is commercial suicide. John Ellis of the Crown Inn at Oakengates makes this dubious assertion without a shred of hard evidence.

As I’ve said many times over the years, if you seek to make common cause with the anti-drink lobby to gain a short-term commercial advantage, you are on a hiding to nothing. In the wise words of Churchill, “An appeaser is one who feeds a crocodile, hoping it will eat him last.”

12 comments:

  1. Churchill didn't say that, exactly. Although it's not a bad line, and he did do the crocodile bit. At that point, he was having a dig at neutrality, specifically. Aimed trans-atlantic, like? The speech was printed (in full) in the NY times. Or you can read it here. Cheers!

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    1. Many well-known quotations weren't said as such by the people they're attributed to, including the famous ones by Burke and Voltaire.

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    2. You weren't far off, Mudgie.

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  2. I canmake a cup of coffee using supermarket ingredients for less than 50p but I have never come accross Costa or Starbucks or Nero complaining about that. Coffe shops, like pubs are about far more than the product they sell

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    1. Good point David. When the smoking ban came in, it brought home to me why I paid £2 for a coffeee in Caffe Nero. Without a cigarette, I wouldn't sit in there for long if they were offering free coffee. I paid 20p for a coffee and £1.80 for a comfy chair in a warm room with pleasant music and free wifi.

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  3. I think a possible difference is that the majority of the branded coffee shops are managed by the brand owner. The public and who complain about the on/off trade differential are tenants or lessees; they are stuffed from both the on/off trade perspective and the gap between their prices and those negotiable by their free trade competitors.
    To make a decent return in a tied pub( at least a Pubco , not necessarily a small brewer ) you must have a worthwhile food operation.

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    1. I can think of at least one city centre pubco-owned pub which doesn't do food but is always busy with drinkers and turns a decent profit.

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  4. Surprises me it's taken so long to wake up.

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  5. Those that obtain an enthusiasm see the world from their own blinkered perspective.

    I suspect train spotters don't see a transport system but a series of engines they like. Many beer enthusiasts seem to enjoy the beer and don't really get why none beer enthusiasts might not see the presence of beer they approve of as in any way indicative of the pub being an enjoyable environment.

    It seems to me that if pubs can only exist so long as beer is not available cheaper in Tesco, there's not much that pubs are actually providing to justify existing.

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  6. What's the point of going to a pub anyway when you have to stand outside in the freezing cold and you get harassed by the fucking rozzers on your way home?

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  7. Good point Panda. Most smokers have voted with their feet and drink and smoke at home. Hence the dire state of the pub trade.

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  8. The difference has always been even greater in Germany, but you pay for the ambience. As you say, you are not buying a drink. I think of it as renting a seat with a drink thrown in. Either a high rent for a seat in the Royal box, or £2 in the stalls.

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