Wetherspoon’s have recently cut the price of some beers by 20p a pint as a way of illustrating the benefits that could be gained from a post-Brexit free trade regime. However, this has been criticised by the Society of Independent Brewers (SIBA) on the grounds that it will devalue the product and make it increasingly difficult for small brewers to make a decent living.
To some extent, they have a case, as presenting beer as a high-quality, premium product is inconsistent with it being sold in a market where low price is a key selling point. However, comments like this often seem to assume that beer is somehow exempt from the normal laws of supply and demand. If Wetherspoon’s charged half as much again for their beer, as most of their competitors do, they would sell a lot less of it. Every price increase, however small, will make the product unaffordable for someone.
As RedNev argues here, it is wrong to blame drinkers for low prices in the beer market. It’s not as if they’re some organised lobby who could easily pay more, but prefer to greedily trouser the difference. They act as individuals and can only make their buying decisions based on what is set out before them. Plus it has to be said that, outside of Wetherspoon’s, beer isn’t exactly cheap anyway, with £4 a pint now common in many places, although how the cake is actually distributed is another matter.
Nobody, certainly not CAMRA, is actively campaigning for an across-the-board cut in beer prices, and I’ve argued in the past that relative price alone is a relatively minor factor in the decline in the pub trade over recent years. But it does beer no favours to be asked to pay a premium price for something that isn’t of consistently high quality.
I’ve discussed the beer pricing issue at some length in the past, and don’t intend to go over the same points again. However, rather than just complaining that life isn’t fair, the brewers should recognise that competitive markets are often unforgiving, and look at what they can do themselves to enhance the perceived value of their product.
There are a couple of factors in the marketplace that clearly work against this. The first is oversupply – there are a very large number of breweries chasing a finite amount of business, and many of them, for various reasons, are in a position where they don’t actually need to make a full-time living from brewing. This inevitably leads to intense price competition and deep discounting, which may benefit pubs and consumers in the short term, but which doesn’t produce a healthy brewing industry. It may sound harsh, but some kind of shakeout is needed to restore the equilibrium of supply and demand and allow the remaining brewers to improve their margins.
Then there is the prevailing culture, at least in the cask beer market, of ever-changing rotating guest beers. This presents cask as an undifferentiated, interchangeable product and denies drinkers the opportunity to make repeat purchases if a beer takes their fancy. If brewers wish to develop a premium reputation for their product, it is important to be able to secure permanent lines in pubs – possibly for the brewery rather than specific brands – so that customers are given the opportunity to show loyalty rather than just accepting what happens to have turned up on the bar.
But there are things that brewers could do to improve their situation. The first, which may sound obvious, is to actually brew good beer, so that people will try it, enjoy it, and ask for it again. If you don’t like Wetherspoon’s, don’t sell to them. Nobody has to; they don’t operate a monopoly. Try to avoid cut-throat price competition, and if necessary just walk away from a deal rather than selling at a price you’re not happy with. Ultimately, if you conclude you can’t make a living from it, it may be best to shut up shop entirely rather than playing beggar-my-neighbour.
And, perhaps most importantly, do what you can to gain more control over your distribution chain. This means that you can exert more influence over both the selling price and the quality of the end product. Restrict your sales to outlets that you know you can trust and, if finances allow, try to develop your own pubs and bars. Even a single brewery tap can act as a showcase for your products. These are things that far-sighted breweries are already doing. Yes, it’s a tough world out there, but brewers don’t just have to sit back and take it.