In response to the recent debate over at Boak & Bailey about the apparently very poor returns available to brewers, I thought I would create a poll on whether beer was really too cheap in British pubs.
The result was a resounding “No”, with 71% taking the view that beer was generally too dear, and just a solitary person thinking it was too cheap. If you really want to pay more for your beer, of course, there are plenty of pubs only too happy to relieve you of a larger chunk of your hard-earned cash.
I don’t deny that the beer market, especially for small brewers, is extremely competitive and many struggle to make a decent living. But, by and large, that isn’t reflected in low prices paid across the bar. In most parts of the country, a typical pint of 4% beer will be well north of £3, and across much of London and the South-East it approaches or even exceeds £4. Spoons are usually a fair bit cheaper, but the general run of pubs certainly aren’t. If the brewers aren’t getting much of that, it suggests that the cake needs to be divided up differently, not that drinkers should be expected to pay even more.
Even around here, it’s common to be asked to pay £3.70 for something of fairly modest strength. Especially if the quality is indifferent, I find it hard to see that as anything other than expensive for what it is. I still tend to feel that a reasonable price is £3 or under, and I’ve certainly enjoyed several different beers up to 4.5%, most notably Draught Bass, for that kind of price in good pubs in recent weeks.
The problem is that this is really two different questions:
ReplyDelete1. Is the expected market price for cask ale too low for small brewers (and publicans?) to make a consistent, comfortable profit without cutting corners?
2. Does the usual price of a pint in the pub seem too high to consumers?
The answer to both might well be 'yes'.
£3.50 a pint gives plenty of headroom for a reasonable margin for both brewer and pub licensee.
DeleteI'd say the problem is more to do with an excess of supply amongst smaller breweries and a lack of product differentiation.
The rotating guest beer culture is also a factor as it denies brewers the opportunity to build up a reputation amongst customers. If drinkers are asking for your beer to go back on the bar it gives you the opportunity to take a firmer line on pricing.
Serious question - What do folks think the publican's margin is on a £3.50 pint?
DeleteWhy should the average punter give a shit about the cost breakdown of his pint, or any other product he buys? All he's concerned about is whether, to him, it seems value for money or not.
DeleteWell heck, you're the one who wrote "reasonable margin".
DeleteBut seeing how you ask, I'll tell you why the average punter might care: For one thing, it's in everyone's interest that the businesses which supply us are sustainable (in every sense), also, the average punter works for a business which sells stuff - the punter's mortgage and their retirement fund depends on their employers viability, and most folks are sufficiently empathetic to suspect that other people might be in a similar position - I guess most average punters aren't interested in doing their neighbours out of a living just so they can buy cheap shit. And, on the other hand, we care because we don't like the idea of being ripped off. So our estimation of "value" is likely to be swayed by suspicions that we're being exploited.
So, no, that's not all your "average punter" is concerned about. You seem to be confusing them with some naive theoretical abstraction out of an introductory economics text.
Why should the average punter be expected to have any knowledge or interest in the cost structure of any consumer product he buys, whether it be frozen peas, newspapers, petrol or beer? It's not his problem. You really do inhabit a bizarre alternative universe.
DeleteYeah, you just asked that. And I answered you. If you can't be arsed reading it I'm afraid I can't do it for you. Stay frosty.
DeleteStringer's crying.
DeletePeace, children, for is it not written in the Telegraph Supermarkets agree to set new minimum price for milk amid mounting pressure to give farmers a better deal.
ReplyDeleteLast year's news, of course.
DeleteTruly, my son. The thing that hath been, it is that which shall be; and that which is done is that which shall be done: and there is no new thing under the sun.
Delete@StringersBeer - if you're so antagonistic towards me, I really don't know why you even read my blog, let alone commenting on it.
ReplyDeleteAnd my point still stands - it is utterly ludicrous to expect the average consumer to have any idea of the cost breakdown of 100+ products regularly purchased. Basically, with the odd bit of friction at the edges, free markets sort that out, so there is no need to bother.
I'm not antagonistic towards you. I'm just saying you're wrong. It's not my fault that you expect everyone to agree with you.
DeleteIf you weren't being antagonistic, you would say "I disagree" rather than "You're wrong."
DeleteIn Germany, pub beer isn't much cheaper than here. Beer shop beer is very cheap, due to no or negligible duty. German pubs have a much higher gross margin on their beer, hence the more pleasant surroundings, higher paid staff and better service. I don't think our pub beer is outrageously expensive, but we suffer in other ways because of the high duty.
ReplyDeleteThe point is often missed that higher duty doesn't necessarily mean higher prices to the drinker, but economies further up the supply chain. After all, people only have so much they can spend on beer. IME I'd say mass-market lager-type beer in Germany, both in the on- and off-trades, is generally of considerably higher quality than that in the UK.
DeleteUK duty + vat on duty is 62p per pint of 5% beer.
ReplyDeleteSo plenty of headroom to give brewer, distributor and publican a decent margin if selling it at £3.50 a pint.
DeleteStrictly speaking the VAT is charged on the selling price , duty is a separate tax. A combination of the two works out at 60p on a £3 pint, 68p at £3.50.
ReplyDelete