Priced out

In the recent poll I ran on reasons deterring people from visiting pubs, “High Prices” came a strong second after the obvious front-runner. Pubs have certainly gained a reputation for being expensive, and over the years the gap between pub prices and off-trade prices has steadily widened. To some extent this is inevitable – as living standards rise over time, the price of services will tend to rise relative to that of goods because of the greater labour content, and a pint in a pub or a meal in a restaurant contains a substantial service element.

However, what has happened is not that off-trade drinks have become cheaper relative to general inflation, as is sometimes alleged, but that on-trade prices have risen substantially faster. I remember that, when I first moved in to this area in 1985, a pint of Robinson’s Unicorn (then Best Bitter) in many of the smarter pubs was around 60p. In the 28 years since then, the Retail Prices Index has increased by 168%, which would make that 60p pint £1.61. In practice, though, it’s more like £3.00, a rise of well over twice as much and surely well over any measure of wage inflation in that period too. Drinking in pubs is simply less affordable for most people than it was in the mid-80s.

The pub trade is not a monolithic body, and for each individual pub it may well seem to make sense to increase their prices by that little bit more than the RPI each year to protect their margins. They might lose the odd customer, but in the short-term it doesn’t matter. However, in the longer term the pub trade has collectively shot itself in the foot and lost a huge swathe of trade. And the oft-heard complaint that “pubs are being killed by cheap supermarket booze” doesn’t help as it simply reinforces the perception of pubs being expensive.

Then Wetherspoon’s have come along and turned the industry upside down with an unabashed “pile it high, sell it cheap” approach that has drawn more howls of anguish from the rest of the trade. Spoons are not always as cheap as people think but, unless there happens to be a Sam Smith’s pub nearby, the local branch will undoubtedly be the cheapest place for draught beer and cider. You need to have a very good reason to pay £2.90 for a pint of bitter in a brewery or pubco pub when you can get a wider choice for £2.15 in Spoons, albeit maybe in less characterful surroundings. Arguably, without Spoons, the recent decline in beer sales in pubs would have been even steeper.

It remains the case that, very often, the most successful pubs are those with the highest prices, but they are successful for reasons other than price, and so can afford to charge a premium. On the other hand, a pub with a poster outside saying “Smiths, Carling £2.20” gives an impression of desperation and may not exactly come across as somewhere you’d rush to visit. However, for many people, while they might stomach £3+ a pint for a Friday night out, it’s a price that’s hard to justify just for that casual swift one during the week.

Maybe the traditional tenanted or leased pub model is now obsolete, and in the future pubs will increasingly either be free houses or managed outlets that can take advantage of economies of scale in purchasing. But there can be no doubt that, unless the pub trade collectively takes the pricing issue more seriously, it will continue to price its customers out and wither on the vine.

At the very least, there is a huge amount of scope for borrowing some of the pricing techniques of the supermarkets by having limited-time special offers on various beers that drinkers will perceive as a bargain. And, if you are a free house, get in a cooking bitter from a local micro as a regular beer and sell it at a conspicuously low price. Your other beers may be dearer, but the fact you are selling Bloggs’ Bitter at two quid a pint, all day, every day, will stick in people’s minds and cement your reputation for good value.