Thursday, 9 July 2020

A hike too far?

As pubs and pubgoers emerged blinking into the light after the long, grim months of the lockdown, they were confronted with a landscape that was unfamiliar in many ways. Most obvious were all the new social distancing and hygiene measures that had been introduced, and the widely varying interpretations that had been put on the guidelines.

More subtle were the changes to menus, beer ranges and prices that had been implemented. Wetherspoon’s, for example, seem to have increased beer prices by 10p a pint across the board, although it’s highly likely they would have done that in the Spring anyway. So John Smith’s Extra Smooth and Bud Light have now gone up in my local ones from £1.99 to £2.10, although Ruddles Best is still £1.79.

However, at first I couldn’t believe my ears when I heard what was happening in the Sam Smith’s empire, although this report from Middlesbrough seemed to confirm it. So I had to go along to one of my local ones to check it out on the ground, and in most respects the report proved correct, although I wasn’t expected to wear a face mask at the bar and both ladies’ and gents’ toilets were open as normal. Interestingly, I wasn’t asked for any contact details.

There had indeed been a swingeing increase across the board on beer prices, although it wasn’t a flat rate £1 a pint as some had suggested. The 2.8% beers – light and dark mild and Alpine lager - had increased from £1.40 to £2.20. Old Brewery Bitter had indeed gone up by £1 to £3.00, although they didn’t actually have any as apparently “none had been brewed yet”. Double Four Lager, also 4%, was also £3.00, where it had been £2.08 before. Extra Stout and Taddy Lager were now £3.40 as opposed to £2.30, and the premium Pure Brewed Lager had gone up from £3.00 to £4.20. The barmaid suggested to one or two customers that they could try an Alpine/Taddy split, which works out at 3.75% and sets you back £2.80.

It’s often hard to discern any considered strategy, or indeed sense, on pronouncements emanating from Tadcaster, and this will certainly test the patience and the budgets of many of their regular customers. On a personal level, I’m not particularly bothered, as I go there for the congenial atmosphere – comfortable seats, no piped music, TV sport or screaming kids – rather than the low prices. But if many of the other customers are deterred, much of that atmosphere will be lost, and indeed the future of the pubs themselves may be threatened.

The effect won’t be felt evenly across the board. In some of Sam’s Northern pubs in villages and prosperous suburbs, £2 a pint was effectively giving money away to customers who could comfortably, and willingly, afford more, and there may be little difference in the level of trade. Indeed, in such locations everywhere else nearby will still be considerably pricier. However, in some of their town and city centre pubs, and in some of the back street locals in and around Rochdale that Tandleman has been visiting on and off, there is undoubtedly a strong contingent of value drinkers who are likely to react against the price rises, either by transferring their business to Wetherspoon’s or by not coming out at all. Some town centres also have other value pubs that may see an opportunity.

While Wetherspoon’s are undoubtedly now much cheaper for cask beer and John Smith’s, this isn’t the case across their full beer range. Indeed the company in general succeeds in putting across an image of offering low prices that isn’t always borne out on the ground. For example, one of my local branches charges £3.05 for Carling and Foster’s, although the one nearest to the Sam’s pub is £2.69. Plus in Wetherspoon’s people end up sitting in solitary splendour on isolated tables rather than exchanging banter around a room lined with bench seating, and the management are likely to frown even more than normal on rearranging the furniture.

In general these increases will still leave Sam’s prices on a par with, or just below, those of their nearby competitors. It remains to be seen to what extent customers were there just for the cheapness as opposed to valuing other aspects of what the pubs provided. It’s not impossible that in the long term it may come to be seen as a necessary correction to prices that had become seriously out of kilter with the rest of the market and weren’t really bringing in that much extra trade. Or it could prove to be unhinged commercial suicide. Only time will tell.

It should also be remembered that Sam’s weren’t always known for their cheap prices. Going back a generation, they were on a par with the other family brewers. But a series of policy decisions in the present century have led to them overtaking Holt’s to offer by far the cheapest draught beer in tied houses. It’s certainly what Humphrey’s namesake on “Yes Minister” would call a “bold” experiment, and it will be interesting to see whether the policy holds, or whether there will be a reverse ferret once he finds some of his pubs completely devoid of customers. There is certainly a precedent for this in their backtracking on the Great Pie Fiasco.

(The photo shows a group of probable value drinking codgers in the Olde Blue Bell in Hull).

Edit: Tandleman has, entirely independently of me, discussed the same subject, and reached some of the same conclusions.

24 comments:

  1. The difference with Sam Smiths and other operators is that there is no additional retail margin added to the wholesale price at the point of sale so the individual pubs don't make their own profit, or didn't until now perhaps. That business model used to be standard practice in vertical brewing businesses but as pub operations were split off from brewing (long before beer orders) the opportunity to dramatically increase revenue couldn't be ignored. I'm pretty sure price is a key driver in many Sams pubs so we'll have to wait and see. My local hasn't opened yet but at least the nearest Spoons are miles away.

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  2. Britain Beermat9 July 2020 at 16:36

    No Sam Smith's in South Derbyshire Mudgie so hard to gauge but on the few occasions I've been in price is a factor in returning.
    A rise with no policy change etc is never usually a vote winner ��

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    1. There is the Darley Abbey, but I believe that was already closed before the lockdown.

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  3. Oh my god. A hero of cheap beer falls. They are dead to me now.

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  4. well Fosters is £2.69 down in the local Wetherspoons here, but if you went to any other pub around abouts your starting point would be a £4 minimum for Fosters,its £4.50 upwards for premium lager, so £3.05 is cheap even if its not as cheap as they can push it

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    1. Yes, the point is that for lagers Spoons won't be much cheaper than Sam's, but it's still much cheaper than the general run of pubs. And the premium lagers in Spoons are hardly dearer than the cooking ones.

      Interestingly, in your neck of the woods, the lagers are cheaper in Ipswich than they are in Stockport, but £3.65 each in Cambridge.

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  5. How many pints are most of those regulars having in a session? Recreating the feel they have in the Boar’s Head isn’t going to happen at the Weatherspoons up the street. Do you think they would move on if they only have a pint or two? If they have three, they drop to two and spend about the same. It’s a big increase I know.

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  6. Not sure why this feels such a hammer blow, but it is definitely a setback to the unique drinking culture of the North.

    As you say "If many of the other customers are deterred, much of that atmosphere will be lost, and indeed the future of the pubs themselves may be threatened."

    Much as I love their pubs (and the Stout), I probably only put £15 in their coffers last year, and the hike would still leave them good value.
    But their pubs in Eccles and Weaste and Sheffield weren't heaving last year and I can see this impacting viability.

    Not sure about Stockport or Manchester, but Craft Union seem to offer the best value outside Spoons(£2 a 6X in Dereham), and are closer to the spirit of Sam's.

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    1. Just picking up on the Craft Union note,I have suddenly in recent times become very impressed with their value & offering,to the point where if I see one in passing I actively make a point of going in.They are closer to the spirit of Sam's certainly and possibly Sam's should be drifting 10% in their direction on several fronts.

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    2. Craft Union pubs are very much boisterous TV sports venues, though, which goes right against the Sam's ethos. It all kicked off last Saturday in the one between Spoons and the Boar's Head in Stockport.

      The same is true of Amber Taverns who are another competitor at the value end of the market.

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  7. I think that the main feeling your readers and I share is that this is risky. Sam's have so many closed pubs, so many odd policies and customers used to cheapness that the business could take a further knock.

    We'll have to see.

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    1. Yes, and I don't feel that it's backed up by anything more than Humphrey's gut feeling.

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    2. Every direction the business takes is backed up by nothing more than said gut feeling or whim.

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    3. We won't see, because it is a private unlimited company and does not have to publish accounts. You can work out who owns it from Companies House records but have no idea of the credit-worthiness of the individuals. A lot of businesses will not deal with that type of company, at least not on a significant scale, so much more has to be done in-house. There seems to be another generation of Smith emerging to carry on from Humphrey, but I wouldn't be optimistic about having more transparency.

      In the 1980s I worked for an insurance company that was an investor in Smith's debenture loans. When they decided to go private they had to pay the loans off, which was costly given movements in interest rates since the loans had been issued. Their first offer was a joke but they did they come up with something we could accept - which cost them a few millions but obviously the private status was worth it to them.

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  8. Like 'mudge I have always considered the cheap beer to be a bonus at Sam's pubs. The pubs are what pubs wet led pubs should be.
    The Boars Head and Queens Head in Stockport. Mt cycling destination, The Park Gate at Peover and, my favourite the bus accessible Crown in Glossop.
    I rarely swear in public and prefer others not to do so, so that isn't a problem for me. And I have never been told off for reading my kindle or looking at my phone.

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  9. One area where I can see the new pricing policy causing a real problem is in pubs using the "Southern" pricing structure in less well-off places such as Gloucester and Newport (Mon). The £4 pint of bitter there is going to put them well above most of the competition.

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  10. A group of around 10 of us who were fairly regular Sam Smith's visitors in several Rochdale pubs have decided we won't be going back. My own favourite tipple "Extra Stout" has gone up £1.10. We don't mind paying such prices as a one off in Manchester etc, but for regular weekday drinking in a back street pub it's far too much of a hike.

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    1. Although how much is Guinness in Rochdale pubs?

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  11. Recently I've learned that OBB is not sold in every Sam S. pub and that reading Kindle is verboten. My nearest one is Colpitts Hotel in Durham, a very different place from the other one in town, Swan & 3 cygnets. Last time I was in Colpitts was January 2nd, Thursday, and they did not have OBB. I had to walk out and go to the nearby Station House instead.

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    1. It is listed on WhatPub as having OBB, and certainly did when I was there a few years ago. Many Sam's pubs have OBB in keg form, but I've never come across one that didn't have it at all.

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    2. Let's hope it was a temporary problem due to the end of the year. Are books allowed? Does not make sense to ban kindles - I like my kindle on my beer walks and am quite sure I've often read it in Sam S. pubs. I once had a family friend visiting from Finland and his opinion was that OBB was the best beer he had on that trip, mostly around Newcastle and Durham. One can only drink so many cask ales with kiwi etc hops.

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  12. The Stafford Mudgie11 July 2020 at 18:59

    From my 21 pints of OBB last year I would conclude that it'll still be worth every penny of £3.
    And we wouldn't want Humphrey to suffer financial hardship in old age !

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  13. The only Sam Smith's pub in Cardiff has always been 'reassuringly expensive' with India Ale at £5.00 a pint even before lockdown. No OBB was sold

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  14. I was in the Boar's Head in Stockport last Friday. It was as busy as I would have expected it to be given how quiet the town centre was in general, with several groups of customers who didn't strike me as "value drinkers". And Robinson's Unicorn in the Swan With Two Necks was £3.45.

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