Wednesday, 31 July 2013

How Much is Too Much?

In my post yesterday about Meantime's Old Brewery in Greenwich a few people picked up on the expense of my pint.  I think it was £5.20 for a 5.2% beer - North Friesian Pilsener.  Pretty expensive really. Cookie asked me what is my limit in paying for a pint and I remarked that this was getting near it, though of course in this case I was making allowances for time, circumstance and place.  Greenwich is expensive, I bet the premises and overheads are expensive and Meantime believe in beer being expensive. Brewer and owner Alistair Hook has made that clear many times. 

In my local, a pint of Lees Bitter (4%) is £2.60. Nearby in the Ship, an imported Czech lager, Bohemia Regent (5%) is £3.50 a pint..  I can still get a pint in Wetherspoons using its Wednesday offer (up to 4.5%) at £1.95, or pay a whacking £2.15 at other times. You could well argue that to charge top dollar for beers made in the back of the pub is a bit cheeky, as many of the usual overheads have been removed.  Another example might be The Marble Arch in Manchester, which isn't backwards in coming forwards price wise either, for its beers brewed yards away.

Now London is seen as a special case, where somehow we must pay more.  The £4 pint of ordinary cask is common, usually for beer of pretty dubious quality.  The quality may be better in, say, Manchester, but gougy prices in the Northern Quarter aren't exactly unknown there either.  Converserly, Sheffield, one of the best places to drink beer in the UK is remarkably cheap on the whole.  Clearly property prices and other economic factors have a lot to do with differences, as are pricing policies which set out to attract certain customer demographics.  But on the other hand, you could argue that where beer is concerned, the beer revolution that many speak of is causing a class divide in beer, with exotics for moneyed and dross for the rest, with large numbers in between choosing to drink at home. Even classier beers are drunk at home more than in the pub and why not - some of the prices seem simply ridiculous.

At a time when beer sales in the last quarter fell by another 5.8% in pubs and in the same week we see that according a Mintel survey observes, “While the price of beer has been frozen this year, over two thirds (67%) of monthly out of home drinkers already think that drinking out of home is now too expensive, providing the impetus to switch to cheaper in-home drinking".  So it seems that even of those of us that actually still drink in pubs, only a third are not seriously thinking of drinking more at home as opposed to going out to the pub.  This, if not changed, can only lead to an inevitable further decline in pub numbers, more brewery closures - see Dave Bailey on this too-  consolidation and market decline.
Of course you can take the view that this is just the market performing as the market should and that is a valid view.  As a pub man though it pains me to see the polarisation of the market between the haves and the have nots, to the detriment of all pub users.

When I remarked about "save up and go" to Meantime, I meant it.  For many it isn't just the expensive Meantime that has to be saved for, but their ordinary local pub. Too often there is no option price wise for many other than to feel that the pub is just not affordable any more for what it offers them.   That's bad enough, but when us old codgers die off and the current generation of free spenders have to knuckle down to kids and mortgages, you can't help but think there are plenty of bubbles yet to burst and expensive craft beer might well be one of them, joining other segments that are currently suffering diminishing returns.For one reason or another it seems that inexorably we are losing that most British of habits, going to the pub.  Price is clearly if Mintel is to be believed, a huge part of that change of habit.

It's a gloomy picture.  I reckon I'll go to the pub tonight while I still can and while I still have some company that can afford to do so too. 

While the long term picture is gloomy, in the short term, it will likely be still OK enough for me until I'm brown bread or gaga. But still not a good thing overall.


Pastey said...

As you've mentioned, the price of a pint isn't just about the beer, it's the atmosphere, company, etc, etc. When there's a small price difference, I personally think it's often worth it. Even if it's £1 a pint, over a night I'm not likely to drink more than 5 or 6 pints, so would happily pay £5 or £6 more to have a better evening than sitting in a grotty boozer that sells cheap beer.

There's also the old adage of punters will vote with their feet. And I do. Yes, I drink in Port Street, but I rarely drink in Kosmonaut because I find it too expensive. The same beers are available around he corner for cheaper. But a lot of people do drink there because it's the atmosphere they enjoy, and very likely because they want to be seen drinking there. If a pub opened up that served as good beer as Port St, with as good an atmosphere, but was less expensive, then I may well find myself going there.

Didn't CAMRA used to publish their national price survey results? I remember seeing them for Lancaster a fair few years ago, and it was interesting reading. Taking it further, surely with modern technology there should be a simple way of publishing the average prices collected down to pub level that's easy to access. But the actual cost of the price of a pint has never really seemed to be a major factor for CAMRA, except for the odd remark in a pub listing in the GBG or the (unjust) jokes about the members counting pennies over the bar.

As for the price bubble, I think there may be one, but I think it's far from bursting. There's a lot more beer drinkers around at the moment, and they're drinking the more expensive beers. It's rare to go into pubs like Port St and Kosmonaut and not see them busy.

Bryan the BeerViking said...

I suppose some of it is the publicans trying to make a living, pay off their gouging pubco landlords, etc. Certainly business overheads in London seem to be more expensive than elsewhere in the UK.

Here in northern Germany, I can buy perfectly drinkable bottled beer in the supermarket for the equivalent of 50p a pint - heck, I can buy Andechser Dobblebock and Schneider Aventinus for around 50p a pint - yet in a bar I will be charged between £3-£4 equivalent even for quite ordinary factory-made Pils.

On the downside, it's symptomatic of Germany losing much of its pub culture decades ago. On the upside it means that owning or running a pub or bar can still be a profitable activity. Not like in Britain, where pubco tenants can be on less than the minimum wage.

Lew Bryson said...

"But on the other hand, you could argue that where beer is concerned, the beer revolution that many speak of is causing a class divide in beer, with exotics for moneyed and dross for the rest, with large numbers in between choosing to drink at home."

That's the takehome on this one for me. I see it more and more here in the U.S. Here in Philadelphia, it's a rare pint that's less than $5, and I'm regularly asked to pay $8 or more for a pint of cask ale (which, finally, is at least being done right here). Why would the everyday drinker want to switch to something that expensive?

Curmudgeon said...

And yet the trade in general continues to increase prices above the rate of inflation and wonders where all the customers have gone.

People may well think it's worth paying a premium to drink nice beer in a nice atmosphere, but unless they're made of money that's going to become an occasional treat, not a regular habit.

Spoons deserve a lot of praise for keeping pub drinking affordable.

Cooking Lager said...

I think you’re spot on, Tand. Expensive bars in posh areas seem to be doing okay, so there are plenty of punters that are willing to pay top dollar. Pubs in less prosperous areas are dying off, I think, because prices, whilst cheaper, are too expensive for the more modestly remunerated locals who are rationally choosing to go out to the pub less frequently. Pub prices on a wet Wednesday night are pricey for a fella on modest pay feeding and housing a family.

Enthusiasts of anything will include people willing to pay top dollar to enjoy their hobby and value that hobby above what regular folk think it is really worth. Beer is not unique in having that feature amongst its advocates.

Occasionally I even pay top dollar, if occasion requires it, but my nature is to seek value for money and not feel ripped off regardless of transaction. I guess I’m a bit of a tight wad. I’ll grumble and stump up on holiday as to not spoil the trip, but wouldn’t pay that regularly.

It’s difficult to say what a pint is really worth. It depends on a lot of factors. But you kind of know whether a bar or pub is over the general odds of the wider market and taking the piss. Usually when someone tries to appeal to vanity by making out you are more discerning for stumping up is a good sign you are being taken for ride. For only a couple of quid a drink more to be better than the wider mob! A bargain!

As for a class divide, wasn’t it ever thus? I’m led to believe pubs used to have 2 rooms, a cheaper one for scruffy louts like me, and a posh pricier one that saved you the ignominy of having to look at the likes of me. Price remains the best tool for keeping the wrong sort out.

Phil said...

So 'bars' are the saloon and Spoons are the public...

The price I won't pay, at the moment, is something like £7/pint; even for a half or a third, even for something I really fancy (e.g. Human Cannonball at the Font), my hand just won't go in my pocket. Below that there are prices I will pay but will remember for a long time afterwards and moan about if the beer doesn't seem to be worth it; that price point is £4/pint. YMMV.

Agree heartily with the main point of the OP. When people say "why should a really good beer, made with care and imagination, using proper ingredients, cost exactly the same as mass-produced swill?" (and it's an argument that lots of people do make) I say:

First, because it always has done.

Second, because this has always been a good thing for the drinker. And it still is a good thing for the drinker. (Some of my best friends are brewers, but if it comes to it I put drinkers first.)

Third, because the price parity tells us something very important about beer: the good stuff and the swill are the same thing. There isn't "common man's beer" and "elite beer"; it's all beer. The good stuff isn't a whole new category of alcoholic beverage*: it's beer, done properly.

Fourth, because what happened when the corporate swill-merchants took over wasn't that they started undercutting proper beer, out-competing it on price by maintaining the same margin on lower costs. What happened was that they carved it out of the market and maintained the same price point, giving themselves a higher margin. (Actually they set a slightly higher price point, at least for lager, but this doesn't damage my argument.) There's no historical reason not to stick with the market when it comes to setting the price of A Pint of Beer.

In short, we don't want to provide an alternative to rubbish beer - particularly not a price-rationed alternative. We want there not to be any rubbish beer - we want to take beer back.

*Although when I drink something like Toby McK's juniper and lemongrass saison I do wonder.

Stono said...

I know London can be a special case, but Ive seen this increasingly in non London locations in the South/East too, where the most expensive pubs are generally busier with people paying the extra premium willingly or not, than the pubs selling sometimes exactly the same beer cheaply. And I wouldnt be surprised to discover the more expensive place actually sold more beer. whether they make more profit is a different debate :)

but I dont know if thats a bubble or not, I remember the first time it cost me more than a fiver for two pints of beer and that was nearly a decade ago !! and the same place is happily dishing out the same beer still now but its £4 a pint, and if anything its busier now than its ever been, even midweek now, when it used to be quiet, and I just cant see it stopping anytime soon.

Rob said...

I think it's part of an overall shift towards going out being a leisure experience rather than part of day to day life. You see a similar thing with shopping - when you can get stuff online for cheaper there needs to be a draw, so shopping centres these days have more space for leisure.

I'm one of those guys with kids and a mortgage and only get to the pub every week or so. But when I do go I want it to be somewhere I enjoy, so I don't mind paying a bit more. My local is expensive, but it's nice. They show the sport without it dominating the place, have a great outdoor space so you can smoke in relative comfort, and a darts/snooker room. I can quite happily let the evening go by there without feeling the need to go anywhere else. It's probably 50p more per pint than the average but that's only 2 or 3 quid over the course of an evening. So its not exactly a dent on the finances.

Bryan the BeerViking said...

Brainfade, sorry - bottled Andechser and Aventinus works out about a quid a pint, not 50p.

py0 said...

If you can prove to me why decent beer costs that much more to make than normal beer, then maybe I will be willing to pay more for it. But I am yet to be convinced.

Either figure it out and make good beer cheaply or someone else will (and I will buy that instead).

Curmudgeon said...

When you factor in transport costs, duty and pub overheads, which will be much the same, the actual cost of a "good" beer won't really be all that much more than that of a mass-produced one. A few pence per pint, no more than that.

Also you will find the same beer being sold at widely varying prices, which suggests price over the bar is mainly due to the policy of the pub, not wholesale prices.

david m said...

The UK traditionally had an unusually low price premium for out of home drinking versus in-home. Arguably we are seeing a move to a more internationally normal situation - not saying that's a good thing, just a fact.

It's increasingly questionable why people of limited means would regularly pay 4x (and maybe one day 5x) the price of supermarket beer brand to sit and drink one in an average pub? Compared to the motives to buy a more unusual hard to find beer. So, as much as I cherish the egalitarian nature of proper pubs, I dont buy the argument that it's "all beer".

A very interesting blog and a fundamental market issue, but my personal view is this trend is a one way street, for societal reasons others have touched on.

Ultimately the drinker decides what is an unjustifiable price, and the bars/pubs concerned will discover that - whether that's in London or anywhere else. For example there are some interesting posts on this subject relating to the pricing of the London craft beer festival, at the foot of this article:

Tandleman said...

david m: Thanks fore the link. It's been in my mind to write about that, but frankly, the writer there has done such a splendid job that I won't bother.

Not much to disagree with in what you say either.

py0 I tend to agree. Ingredients can't possibly account for the high cost no matter the bleatings from some. And not all expensive beers have expensive ingredients.

Rob: Fair points, but as I said, they point to a grim future for the pub.

StringersBeer said...

I reckon that for most pub beer, the biggest chunk is the pub markup. i.e GP > 50% No surprise there, I hope. For pubs which are expensive to run (high property costs etc) there'll be a large impact on the price we pay at the bar. At the same time, 10p spent on costly ingredients, or process, will (once everyone's put on their markup) translate into much more on the price of a pint.

Rob said...

Stringers, but that's what I don't understand. Why should the mark up be a percentage rather than a flat rate? It doesn't cost any more to serve, ship around etc etc, so why do those involved need to make more profit than on a cheaper beer?

If it was done on a flat rate you would also get less impact from cheaper brewers flooding the market (as Hardknott Dave) was complaining about.

Rob said...

Tandleman, things evolve. There's already been a massive change in how people go to the pub. Partly it's a matter of leisure activities there's more choice, and certainly more to do at home. Partly it's a social change - I don't think there exists the culture of men going to the pub straight from work whilst the wife is at home cooking tea and looking after the kids. I think men are more involved with home life now, which means less time at the pub. I wouldn't say these changes are bad but they aren't great for pubs.

Cost, whilst certainly important, can be overplayed. Most people, if you ask whether anything (clothes, food, car servicing) is too expensive, will probably say yes. The statistic doesn't mean anything unless you have year on year comparison.

dave unpronounceable said...

I agree the pub mark-up system is one of the biggest factors in price-differential - it makes a 2p duty rise into 6p or more at the pump (rounded to 10p for good measure, obviously...), an extra 2 quid a firkin to pay for hops becomes another 10p a pint, etc, whereas if pubs worked on the basis of 'add £2 to cost' per pint, then the differences become more negligible - and theoretically this is more accurate, as it costs the same in glass use, staff time, etc to serve a decent craft beer as cheap swill

Where I'd say it doesn't work is in the case of the very strong beers, as people will drink fewer pints, so for an impy stout you may need to make 2 quid a half rather than 2 quid a pint

Tandleman said...

Rob and Dave

Couldn't agree more. Makes it all the more galling that brewed on premises beer is often the most expensive,

Curmudgeon said...

If pubs didn't set prices on a percentage mark-up basis, they would have to increase prices separately at another time in the year to take account of increases in overheads. See this blogpost.

Rob said...

But we're not talking about when prices for the same beer go up, rather different prices between beer. If you do a flat mark up then yes of course that would need to be reviewed for inflation.

You could be a bit more sophisticated and divide it up into bands based on strength (e.g. mark up of £1.50/pint up to 5% and £2/pint above) to account for people drinking less of the stronger stuff.

Cooking Lager said...

If it comes down to why pub A is more expensive than pub B or why London is a rip off, I thought it was down to return on capital employed.

If you buy a building for £500k that is more capital employed than a building oop north for £200K, so you need more return to justify the capital.

As for why pub A is pricier than pub B next door it can be any variety of badly run, poor business model, profiteering, seeking to appeal to posher types.

Anonymous said...

Some of the replies here indicate people have no idea of how much it costs to actually produce beer. Raw materials and duty can exceed £70 per firkin for strong brews, or ones with expensive hops (amirillo is about £25 per kilo atm). That doesn't account for rent, staff, power, delivery, replacing "lost" firkins, etc. if you think you're going to be drinking those kinds if beers for £3 per pint you're very wrong.

You might as well argue that all wine should cost the same as it's just old grape juice. And it's all made the same way and costs to same to deliver.

Curmudgeon said...

Historically, though, there has been no price differential between "good" and "bad" beer of the same strength. Indeed, going back thirty or forty years, the better beers were generally cheaper.

Even now, outside of a handful of specialist pubs, there is no perceptible price premium for "better" cask beers.

Tandleman said...

Fair point Anon, but may I draw your attention to registering or displaying a name?

pyo said...

Why must good beer have to be strong? Most of the nicest beers I have had this year have been 5% or under.

Other than the price of expensive hops (which would add, what 10p to a pint?) what extra costs apply to a beer like, say, Thornbridge Chiron that don't apply to Bateman's XXXB.

dave unpronounceable said...

good beer needn't be strong. Strength is probably the main cause of higher costs, both in the sense of more ingredients (a 5% beer does pretty much use 25% more malt and hops than a 4%) and of course duty (especially when the tramp-tax threshold is crossed)

But costs can also be incurred by using more and/or better hops (caveat: better hops don't always cost more - Columbus cost half as much as fuggles, yet have double the alpha and taste a lot better (IMO of course)), dark malts (these cost but don't add strength), better quality malts, aging, adjuncts (fruit etc), etc

But everyone expects cost/price to rise with strength, but forget the other factors

Arguably, better beer may cost more because to make it you need better brewers, people better at a job tend (with exceptions!) to command more salary than the mediocre.

So, there's plenty of factors that make a beer COST more, but the markup system magnifies these differences threefold. Would you question 'craft beer x' costing 20p more than 'industrial beer y' at the same strength? unlikely. but when the difference is 60p, the question is asked...

StringersBeer said...

It's worth pointing out that average on-trade prices have been broadly inline with inflation generally over the last few years (going up a little perhaps). Off-trade prices, on the other hand have diverged significantly (downwards) from what you'll pay in the pub. I wonder if this has changed the perception of value for some?

Curmudgeon said...

Actually I thought that average off-trade prices had moved generally in line with inflation, whereas on-trade prices had gone well ahead.

In 1985 I was paying 60p for a pint in a pub where it's now £3.00. Over that period, the RPI has risen by 184%, which would make that pint £1.70.

StringersBeer said...

Oh well, you're going back a ways now. But over the last 20 years, nope, it's the off-trade that's shifted down big style. See IFS

The Sleeper said...

You guys crack me up fretting over your cheap pints :-)

Kieran Haslett-Moore said...

whoops that was Kieran Haslett-Moore not 'The Sleeper' bloody work PC :-)

Cell said...

Probably too late to be included in the discussion, but there are some comparisons which seem fair but are in my mind inexplicable.

If naming actual establishments is out of order then I apologise, but knowing the identity of the bars concerned give an idea as to the angle I'm coming from. Only they know the overheads etc, but I suggest that many readers will have their own views as to the relevant prices v location/rent etc.

The first beer in question is the wonderful Hophead from Dark Star. I went to the Harp in London and was charged £3.40 for a perfectly kept cask pint in pleasant surroundings a stones' throw from Trafalgar Square. I consider that to be fair.

A few days later I saw that Port Street Beer House (which I frequent whenever I can) was charging £3.60 for the same pint from cask.

And then I went into the Grove in Huddersfield and paid £2.60.

While I can see how the Grove may be able to do it cheaper due to its location etc, I can't for the life of me see how it can be more expensive in PSBH than in a London honeypot.

Example 2. NZPA from Hawkshead. Not easy to find, and to me a lovely pint worthy of a premium. £3.80 from the never knowingly cheap Friends of Ham in Leeds from cask. That was within my mental budget.

A week or two later I was delighted to see it on keg at Arcadia in Headingley, but for some reason glanced up at the price board. Allowing a premium for much? £4? £5? £6? No - £6.35. Six pounds thirty five.

Needless to say that blasted my price point and I opted for a local brew on cask.

Yesterday I saw NZPA for sale on the wonderful service area at Tebay. Loads of local brews all at reasonable prices. It was £3.50 for 330ml. That works out at over £6 a pint. From the brewery itself it costs £4.50 per bottle including packaging, and eye-watering £7.80 a pint!

Obviously an expensive beer to brew, and I pick it out as it's a personal favourite of mine.

I know there are differences, some of which a mere pleb like me can't understand, but it feels like somewhere along the line something is not right.

Curmudgeon said...

I've had NZPA for £1.65 (using a beard club token) in Spoons.

Cell said...


I'd be in heaven if I saw it in any of my Spoons! But then they replaced Jaipur as a 'house special' with Hobgoblin (a general move throughout the chain I believe) which upset me to put it mildly!

The whole issue of pricing puzzles me, and I think the Hophead is a more reasonable comparison.

I want breweries to get a fair return for their labour, and even a premium to allow for experimentation, but how much is going to the brewery, how much to the outlet? I'm not picking on PSBH, but pockets aren't bottomless, and sometimes you can't shake a feeling that you're being, how can I put it, exploited for your passion.

Cell said...

By the way, in the interests of fairness, I gave the wrong price for the direct cost from Hawkshead. It's actually £6.77 including delivery.