Friday, 7 December 2012

Times Change

Five years ago I was remarking in my blog about the high cost of of a bottled beer in the Marble Arch. I wrote "Also available for purchase by the 33cl bottle was "Decadence" an organic bottle conditioned Imperial Russian Stout of 8.2%. At a whopping £4.50 a bottle."

Doubt if anyone would bat an eyelid now.

Actually maybe they would.  I have a bottle. It is 75cl and 8.7%.  Think it was around £15. Not that I paid for it obviously. I don't think it is organic either.


Maxwell Power said...

I wouldn't be so sure. People weren't so happy about the price of a 330ml bottle of Heineken (£4.20) at the Olympic stadium in the summer.

Cooking Lager said...

The price rises every year, those that are enthusiastic about it just accept it. Some even blog that it is worth it and represents good value.

Meanwhile volume and consumption maintains its steady decline.

michael-j said...

The Sam Smiths' bottles (Taddy Porter, Oatmeal Stout, etc) are now 5.50 each (up from the slightly random 4.03 a year ago.

Which is a shame, because the draught beer is pretty horrible IMO

Professor Pie-Tin said...

It's probably one of the most important reasons why " craft " beer will never go mainstream in the UK.
It's too expensive and very often for no other reason than greed.

py0 said...

There are (or will be) two types of craft beer.

There's the craft beer that will go pretty mainstream and be sold at vaguely reasonable prices in a reasonable selection of pubs around the country. Maybe even up to 50% of pubs within 5 years. We are already seeing this, I went into a pub in Shrewsbury the other day to find that as well as several top notch real ales that they had on last time I visited, they now had Punk, Thornbridge, and a couple of other UK craft beers on the kegs where their foreign lager used to be. All at under £4 a pint and selling well.

...and then there's the craft beer that will always be expensive and experimental and will only be sold at specific craft beer bars where people go for the experience of trying something new and exciting and don't mind paying a bit extra for it.

Looke said...

I didn't really think that much of £4.50 for a 330ml bottle of Samuel Adams at The Slug and Lettuce in The O2. I just brushed it off as "Meh, it's London, what did I expect?".

On the other hand, all the pubs near me dropped priced a little while ago to try and compete. I was paying £3.60 a pint and on average I now pay £2.50. It is slowly creeping back up again though.

Anonymous said...

i think pyo has hit the nail on the head.craft beer need not be expensive there can and will be affordable beer.not high strength nor barrel aged but good beers made with a little more thought than the standard blonde or bitter beers being churned out just now.cheers john

GeordieManc said...

Earlier this week I had a pint of "Cambell & Stronge" - the latest Marble Beers special at the Marble Beer House. "C&S" is the result of the return of former brewer Colin Stronge, now head brewer at Black Isle, to brew with head brewer James Cambell.

While I ordered it knowing that at 6.4% it was likely to cost me a bit more than the Chorlton average £3 - £3.20 a pint, it was sat on the bar before I looked at the blackboard and saw I was being hit for a massive £4.50 a pint.

In one fell swoop, one of my local pubs in South Manchester went past the MCR Arena, the O2, Wembley and many London pubs in taking the acolade for the most I've ever paid for a pint of beer in the UK.

I can't deny it was very nice, but having already shelled out £7.50 for two pints, Miss C and I drank up and left for the Spoons down the road (guest beer £2.25) and then The Beagle, the new outpost from the Port Street Beer House stable. At The Beagle a very "craft" beer First Chop Tea was their priciest cask at £3.60 and I could have had the 8.5% Magic Rock / Dark Star collaboration beer in keg at £4.50 (the same £4.50 that I'd paid for the cask Mable / Black Islein cask).

I paid all of the above prices for the beer in the pub at the time. The £4.50 felt like I was being really ripped off, yet paying £2.25in Spoons I still moved on and paid £3.60 (when I could have had the house beer at £3.20)

I guess I've rambled to the point of forgetting why I started but guess one pont is to query on having pad £4.50 a pint and £2.25 a pint in the same session and not kicking up a fuss - does the consumer get charged what they deserve?

Neville Grundy said...

There isn't a beer I'm willing to pay £4.50 a pint for.

py0 said...

But look at it this way: is there a wine you would be willing to pay the equivalent of £4.50 a pint for?

At 8% a strong craft beer is about halfway between a mild and a wine, so you'd expect the price to reflect that. Paying just under £3 for half a pint of craft beer is no worse value than paying £5 for the slightly less than the same amount of wine, surely?

Its just this old fashioned notion that beer is for swigging and only to be bought in pint glasses that is the problem. Can you imagine asking for a pint of wine?

Erasmus Nut-Sedge said...

Anyone flogging draught beer for that price in the UK is having a laugh.
And no matter how the much the craft brewers and their supine lapdogs in the beer bloggerati try to justify it they're fooling no-one.
It's pure greed and no different from the macros they allegedly despite.

GeordieManc said...

Don't deny they are having a laugh at that price, but I very much doubt they threw any of it away.

Supply and demand - if the punters pay it then that's what they will get charged.

I've yet to set a festival price of £4 a pint, but have debated doing so on a couple of occasions based on cost of beer to us. But on both occassions I've set it at £3.80 and it's been the first beer to sell out.

Tandleman said...

Price is still a sensitive subject for most I conclude.

Kieran Haslett-Moore said...

I repeat. You lot don't know your born. :-)

Phil said...

I clocked the price of Campbell & Stronge and ordered a half. Glad I did, too - it was good, but no way was it that good. (Being on a Winter Warmer jag, I followed it with a half of Wobbly Bob at the Spoons, which I actually preferred. Not so interesting, but not so many twigs sticking out either.)

Dave U said...

Sheffield Tap had the Campbell & Stronge a couple of weeks back, fiver a pint (my own fault for not looking at the blackboard before ordering)... glad I started with the least strong though, as Decadence and Chocolate Dubbel were both on, at a wallet-busting £7 a pint (and the Tap don't do thirds, worst luck...)

Even with paying a bit more for quality, tramp tax and the extra cost of making stronger beer, there's no way I can justify paying 7 quid for something 'only' 8%, nor a fiver for 6% (just hink if it had been keykeg, would've been another qid on top of that!!)

Elsewhere the same night I had Arbor Down Deeperer Black Barley Wine, 12%, available in thirds, £3.75 a PINT! (and that was keykeg)

So yes, definitely a case of charging what the market will bear, unfortunately for the majority the market in this instance is distorted by a relative few with more brass than sense!

py0 said...

I bought some whisky at the pub the other day, it was £60 a pint!

They must think we're all stupid! Who on earth can afford to drink whisky?

Anonymous said...

The Japanese , not the Scottish anymore

Coxy said...

It's mugs like py0 who are going to make us all pay more for our beer, as they will accept anything market forces direct, if on mass we refuse to pay high prices , they will eventually come down.
I was at the Lambrate in Milan a couple of weeks ago , beer between 6 and 9 percent all at 5 euros, obviously don't have our ridiculous percentage alcolhol rules!(beer excellent by the way)

py0 said...

Will the prices come down? Or will that particular drink simply no longer be offered?

Lets all refuse to pay more than 50p for a glass of wine in a pub. Imagine for a minute that we were able to coordinate this.

Would wine become 50p a glass?

OR, would pubs simply stop selling wine?

By the way you also need to work on your maths skills, as 5 euros for a half litre is £4.61 a pint.

Dave Unpronounceable said...

yeah, but £4.61 a pint ain't the 7 quid a pint we're talking about above!

no, you can't reduce (even through 100% coordination) the price to an unsustainable low... but you could theoretically cut excessive profit margins by refusing to partake. The example in the Sheffield Tap of a fiver for a 6% beer - I would guess the Tap applied their standard markup, which implies the brewery charged what I would personally call a f*ck-off price for a firkin - i.e. the brewery has upped their profit margin simply because they know they can, because some people will pay it (fools, money, parted, soon, etc). If EVERYONE refused to pay the price, they'd have to scale the price back to a more sensible level. We couldn't force the price down to a quid a pint, but we could (again theoretically, will never be demonstrated unless the coordination can be achieved) force it down to e.g. 4 quid for the beer that was a fiver

py0 said...

Supernormal profit margins don't require consumer coordination to be removed, they just require a competitive market place.

If some fancy experimental craft beer can be made cheaper, then someone will make it cheaper and undercut the competition. If it can't, then that's the price of a firkin, like it or lump it.

If a pub can't maintain the an acceptable profit margin on beer X, then they will simply stop selling it and start selling something else instead.

There is no reason to assume that just because consumers refuse to pay the current price for a beer the price is going to drop indefinitely. If the cost of production is high, the beer may just not get brewed anymore.

There are qualifications here: the market has shifted dramatically recently and is currently still out of equilibrium so a lot of beers ARE overpriced. There is also no logical reason to use a gross profit margin rule. If a pub makes a £1.50 profit on a pint of £1.50 beer, why can't they also be satisfied with a £1.50 profit on a pint of £2.50 beer? It costs them no more to stock it and serve it.

(Cask ale should probably have a slightly higher PM as it is more likely to spoil.)

But you have to accept that in principle that if it costs £2 a pint for the brewery to make some experimental barrel aged lambic, £1 a pint to distribute and transport it via keykeg and the standard pub markup is £1.50 a pint, then you're simply never going to get it for less than £4.50. Neither the brewery nor the pub have any obligation to run as a charity.

Curmudgeon said...

"There isn't a beer I'm willing to pay £4.50 a pint for."

Robinson's Old Tom often sells for that, or more likely £2.25 a half. Mind you, it is 8.5% so will deliver more "bangs per buck" than a pint of Unicorn at £2.80 or £3.00.

Curmudgeon said...

"Lets all refuse to pay more than 50p for a glass of wine in a pub."

Voting with your feet implies there is a realistic alternative you can vote for instead.

Unknown said...

I have always maintained that beer should be more or less proportional to the strength.

I have spent many hours looking a costings and spreadsheets. To make a really great 8% beer actually costs slightly more per HL% to make due to less efficient malt use, greater proportions of hops needed due to less efficient isomerisation of alpha acids in higher gravity worts etc.

It always baffles me why brewers sometimes think that they can do a firkin at a non-proportional price. I suspect it's because they have no idea how much it actually costs to make beer and someone else is looking at the fiancees. Or perhaps more likely, no one actually bothers to do a proper costing.

So yes, £7 a pint for an 8% beer is quite OK if a 4% beer is £3.50 a pint.

And let's be absolutely clear. No one these days is ripping anyone off, certainly not in the beer industry. All we are all trying to make an honest living.

At the end of the day, no one is being forced to buy anything. You look at the bar, look at the price list and choose your tipple. If you don't like the price then you don't have to put your hand in your pocket.

But, if you are not prepared to pay for a beer that is a little different, or a little stronger, then those of us who have done the costings and charge what we think is reasonable will simply stop making them.

Dave Unpronounceable said...

agree with most of that... agree re the proportionality between ABV and price (even though most brewers still use ABV * x + y formula thus making stong beer comparatively cheaper) - and no, I generally wouldn't pay £3.50 for a 4% any more than I'd want to pay £7 for an 8%. That said, it's only the ingredient cost that doubles, not necessarily the labour, and not necessarily the equipment cost, and certainly not the distribution etc

there is something in what py0 says though re pub margin - does it cost them twice as much to store and serve an 8% beer than a 4% one?

Unknown said...

Dave, no it doesn't cost twice as much to store and serve an 8% beer. But the customers are twice as much a pain in the arse after the same number of pints!!

I'm sure you are an exception, however.

But seriously, I disagree with you point that ingredients are the only thing that is proportional. Generally for a stronger brew you get less out of the brew house. If we do a 6% beer we generally need to do two brew days to get the FV full rather than just one for a 4% beer.

Bigger beers take longer to ferment and need longer maturation. These times in stainless have to contribute something towards cost of ownership of the stainless steel, building space rental or whatever. Put simply, to make the same profit on an 8% beer you have to charge more because you could have made twice as much 4% beer with the same overheads.

Honestly Dave, I'm not trying to sell something that is over priced. I have really done detailed costings and it is extremely difficult to regularly make 8% beers at a low cost.

py0 said...

In your experience Dave, is the total cost of making a vat of 8% beer exactly twice that of a 4% beer, or slightly more, or slightly less?

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Dave U said...

I think the doubling of brewery costs is valid IF you are brewing at full capacity - i.e. if instead of brewing e.g. 5bbl of 8% you could have brewed (and sold!) 10bbl of 4% then yes I agree the cost is double. Our plant is such that we can get 6bbl of anything up to about 5.7% - at that point the mash tun is full to capacity, thus to make anything stronger means reducing output, but the copper and fermenter are 6bbl so even if we make a 2.7% beer (the lowest we've gone so far) we still only get 6bbl. Obviously our set-up is a bit different to most, in that we hire a brewery on a per brewday basis, but the principle is the same - brewing a 6% beer doesn't cost twice as much as brewing a 3% because we couldn't brew twice as much 3% even if we wanted to

That said, I do generally accept a strong beer costing proportionally more - I have in the past defended 8% beers costing a fiver when people have (in ignorance of brewing processes) suggested that a stronger beer only costs a little more to make - but there is a cutoff of reasonableness in strong beer just as there is for a weaker beer. to use the example above, i consider 7 quid to be over the odds for 8%, just as round here 3.50 would be a lot for a 4%

btw i concede that the new tramp tax does significantly add to the production cost of an 8% beer! though works out about 21p a pint

out of interest Dave do you price using the abv * x + y formula used by most breweries? we do, though mostly due to laziness on my part - Gazza has suggested moving to cost-based pricing, but I don't normally work out the cost til long after we've brewed and sold it! obviously such a formula makes strong beer proportionally cheaper, but the only deviation we make is to add '+ z' for strong beers, where z is the tramp tax paid