A fair price
Tight old gits love to moan about the price of a pint of ale. I think I'm making a big concession by pricing ordinary bitters at less than £3 (remember we're in central London), but I still hear the occasional grumble.
Let me ask you this, then: why is it that the cheapest lager in the pub is often more expensive than a premium ale? British ales tend be produced in small or regional-scale breweries. Consequently they cost more to brew than mass-produced lager brands, yet that isn't reflected in their wholesale price. In pubs wastage on ale is higher than keg products, reducing margins for landlords.
Isn't it time we accepted that we need to pay a fair price - relative to big-brand lagers - for a product as exceptional as cask conditioned ale?
I've been too busy to post on the blog over the last three days. Sorry about that. There's lots in the pipeline for the week to come. On Friday night we had another tasting in the cellar, cracking open big bottles of a massive, barrel-aged beauty. I've met up with The Jerusalem Tavern's new chef, who's started using beer in his recipes. Not only that, but the phantom tramp has returned.
23 comments:
I'm sorry to say that I don't really pay much attention to the price of a pint - it tends to get hidden in the total cost of the round.
The only time I'm surprised is when I hand over a £20 note for a round in a Wetherspoons or a pub up North and get a ridiculous amount of change back.
Sometimes I'm also surprised if I order a pint of something like Sierra Nevada and forget its ridiculously expensive in some places...or if someone orders a pint of Fruli which is similarly so
You mention Sierra Nevada being very expensive. If you're in London and want to try it at a more reasonable price, go to The Marquess Cornwallis on Marchmont Street in Bloomsbury. I think it's about £3.70, and worth every penny.
No!
Completely agree Stonch. Anyone that grumbles about sub £3 (in london) doesn't appreciate the input price inflation that has been affecting both brewers and pubs. Smaller brewers in particular have been impacted through the difficulties they face in hedging against raw material and energy price increases. On the whole I suspect wholesale prices of premium ales have to remain very competitive as they cannot rely on a big marketing spend attracting easy custom (so your GK IPA man goes for Guiness instead of summer Lightning), while it is also partly to compensate the publican for the higher wastage and effort he needs to put in caring for a "real" product - but as you imply most landlords pass the savings on via cheaper retail prices to the punter. Finally a publican friend of mine up north says he gets umpteen calls every week from breweries trying to get into his pub (you no doubt have a similiar experience) so I'm sure the competition in the real ale sector keeps wholesale pricing relatively attractive.
Your mark up should be relative to the wholesale price. The rest is nonsense. Cask beer is cheaper to produce in the brewery because it requires less handling and input. The idea that it costs more to produce is very challengeable to say the least.
Why aren't there many micro lager brewers given the lager market share? It costs more to produce that's why!
The price of a pint of ale is absolutely the last thing on my mind when buying. It's purely down to whether it's a beer I think I might like, ideally at a strength which doesn't restrict my desire to drink lots of it. I'm more than happy to pay up to £3/pint even for a mild so long as it's a quality beer in good condition.
Where I completely disagree with your post is the idea that qaulity ales from smaller breweries should be priced in line with the crap produced by the beer factories. What makes you think that the prices charged for industrially produced lagers and ales has anything to do with the cost of production, cellar skills, etc.
Just because Carlsberg brewery produce beers with profit margins in the range of several 100%, doesn't mean small-scale brewers should take this as the ideal model, jump on the bandwagon and start ripping their customers off too.
How about a post which suggests that ales form smaller breweries are in fact reasonably priced, but mega-breweries are over-charging for shite.
And what's wrong with letting brewers decide how much to charge for their products, not greedy licensees keen to up the price of everything. (Sorry, my 'Crass Generalisation' filter kicked in there).
Tandleman, of course I know that lager costs more to produce than ale, like for like. But I also know that the big brewers (and I'm talking the multinationals here, the people who produce Stella and Carlsberg and the like) enjoy considerable economies of scale that much, much smaller British ale breweries don't. What they do is cheaper because of that.
But Tandleman the point surely is the size of the lager producers generates massive efficiencies of scale which results in lower unit costs for those products and even the biggest real ale producers do not match the production scale of the multi national lager brewers. Add in all the fixed costs a smaller brewer has to distribute across his output and the price of production is surely more expensive.
Isnt there still Tax incentives for micro brewers under 18K Barrels to offset the economies of scale??
Karen, when you factor in wholesale price, additional wastage and the landlord's own time in looking after ale, the cost is higher to him or her than it is for a mainstream lager. Greed on the part of the licensee simply doesn't come into the equation. Perhaps someone's to blame somewhere down the line - I could easily point fingers - but it certainly isn't the publican, particularly if he or she is tied to a brewery or pubco.
Let's talk actual figures here. We're tied to a pubco and have to buy all beers and ciders from them. When you work it out, we get charged about £1.25 for a pint for TT Landlord. Stella costs slightly less. There's virtually no wastage on a keg of lager, so you can serve and profit from almost every pint (allowing for a few lost each week the lines are cleaned). With the Landlord, you lose a small amount of beer when you tap and spile, you lose beer every morning when you pull through, and you lose beer at the end of the cask unless you try and sell the dregs (I don't). In other words, you don't get to sell the whole 9 gallons. How is it greedy to expect the same profit margin from ale - especially when you consider the time and attention you need to devote to it - as opposed to a keg lager?
I haven't even touched on the fact that you have to tie up working capital by stocking ale in advance to allow it to properly mature and then condition before serving, as opposed to lager which can be served as soon as it rolls in the cellar...
Kerry, that's right, Progressive Beer Duty operates to the advantage of the smallest brewers, although regional-scale ale brewers - still dwarfed by the multinationals - don't benefit at all.
Incidentally, a friend of mine (who happens to be a member of one of Britain's most famous brewing families) thinks CAMRA shouldn't be protesting about high beer duty. In his view it acts as a great leveller. It's a fixed cost incurred equally by, say, Carlsberg and Fullers, and as such helps even up the playing field. Not a view I'm endorsing, just sharing.
Mass produced lager costs less to make than cask beer in a micro. Companies like Carlsberg, Inbev etc must spend large amounts on advertising to sell bland products Overall the wholesale price is similar. The difference is, in my opinion, that Cask ale needs a good turnover. Better price = Better turnover = Better quality, less wastage and better choice = more customers = Better atmosphere = Better pub! That’s the theory I use in the pub I run.
Tom is, of course, right - turnover is the key to making ale profitable. Once you get a rep for serving good ale, you begin to sell more, and that makes the beer (in terms of quality and the choice you can offer) even better, and so on. However, if you let things slide, people will choose to avoid the handpumps or - more likely - they won't come back at all.
Last time I drank regularly in the UK I was paying about 2 quid fifty a pint, and that was some ten years ago. A 50p difference over the course of ten years is pretty much in line with inflation I would guess. Some people just moan for the sake of it.
At least the UK doesnt suffer from the 'Premium' or 'Boutique' beer tags. In Australia the big breweries have created a market where they can charge more (sometimes up to 100% more)for 'boutique beer' which is basically what you should be getting in a base line product. ie. All malt, no adjuncts cutting the grist and brewed with real hops rather than extract. The way the excise laws and pressure from the swill breweries operate makes it virtually impossible to run a brew pub or micro. They do exist, but they have to charge over the equivalent of £10 for a 6 pack of 330ml bottles, and then they still only break even at best.
I think it's a legacy thing, largely reflecting the marketing budget of the mega-players. If we consider the rise of lager in the 60s and 70s, it was branded as continental - a bit classy - and consequently a premium was attached.
This has been continued over the years, with the big players able to use their huge marketing budgets to keep this going (I was eyes-a-goggle when I saw the latest Stella ad, suggesting that since 1366, Belgian brewers have looked high and low for the finest barley, hops and maize - MAIZE FFS!!)
Simple truth is that turnover is key - £3.50 may be *fair* vs the frosted horse piss, but just culturally, you are likely to be shocked by it. Confirmed ale drinkers just assume the other stuff is overpriced...
...look forward to the Friday beer review - was lucky to bump into Jeff as he was sampling - v interesting beer indeed...
I don't like paying more than 6d for a pint of Mild. Living in the past? Yes please.
Stonch - surely your pubco tie gives you discretion to buy at least one handpump from the free trade? In my experience, those who say they can't really just can't be arsed for the extra paperwork to take one from the free trade, so they just lazily take from the pubco's list. Either that or they're a managed pub that has no interest in shopping around.
We were just sent a promotion for Punch leases offering £42/bbl discounts off "retail" price to prospective tenants. Yet a local Punch tavern near us has just closed down because they are trying to jack the rent while the landlord wants it cut due to poor trading. It must be different looking in than looking out. I suspect that in light of slack trading the pubcos are raising the dry rents and looking for more certainty to service their huge debts.
I am surprised to learn that you pay more for TT Landlord than for Stella. Honestly surprised. And that you pay £1.25 for TTL. Is that inc VAT? The legion of micros must surely be offering prices short of £1 to most pubs these days.
To me this is the crux of it. There is so much markup in the pubs. I don't necessarily fault the tenants - they are squeezed by upward-only rent reviews and are really behind the eight ball as any success on their part is met by a rejigging of the wet/dry rent formula.
Everyone concerned should take the time read the 2004 report from the Parliamentary enquiry into the pubcos. It is a real eye-opener into how pubcos operate. The findings disappointingly inspired no action at that time, though there is to be a revisitation of the enquiry this year to see if anything is changing.
"Let's talk actual figures here. We're tied to a pubco and have to buy all beers and ciders from them. When you work it out, we get charged about £1.25 for a pint for TT Landlord".
Even though you don't say what you sell it for and I assume the PubCo nabs any discount thus forcing the price up a bit, let's look at that and do some simple maths:
Buying price: £1.25
Plus VAT - let's assume you haven't added that in - £1.47
Let's allow you a generous 10% wastage and forget that most casks contain at least a litre more than 9 gallons
Cost to you: £1.61
Mark up 60% - selling price £2.58
Mark up 70% and you get £2.73 a pint
Mark up 80% and you get £2.90 a pint.
Mark up 90% and you'll get over your £3.00 barrier.
These are reasonable mark ups, even for London and you ain't in the West End are you? (I guess you won't ever hit 50% GSP buying from a Pub Co unless you really want to pile the price on)
Of course these figures are rough and can vary a little either way depending on pub circumstances, but one thing is obvious - You fix your prices taking into account wastage already. You must do.
Now it may well be that your market can stand a bigger price and mark up - that's fine, but muddying the waters about premium products and the extra care needed is disingenuous. Cask ale should take you around an additional 5 to 10 minutes a day to deal with per line plus a little on those casks not yet in use.
It is also funny that with a few exceptions, brewers don't want to see cask "premiumised" - they'd not get any more for it. It is licensees and pub operators who do and whose siren words should be absolutely resisted.
We can talk about why the gap exists between lager and cask another time.
Stephen: "Stonch - surely your pubco tie gives you discretion to buy at least one handpump from the free trade?"
No, I don't believe it does sadly. I would if I could.
Tandleman, you don't deny my essential point: cask ale costs more to sell than lager, yet attracts a lower price. That makes it less attractive for pub operators. That's not a good thing if you want cask ale to be widespread and successful.
As for the rest of what you've written (which is incidental to the discussion): it suggests we have a fundamentally different view of the kind of money publicans should make as a return on their capital investment and hard work. However, that's an entirely different discussion and not one I'm willing to have here.
I think you see this from only one angle. If it was simply buying beer at the best price you can, marking up fairly and then everyone making a reasonable living then I'd agree. It isn't so. The trade is far more complex than that.
Cask ale doesn't cost more to sell or make. I don't agree with that one bit.
The thing is for publicans to remember with ale is ,when I go out with my mates who are lager drinkers I always choose the pubs because they know their product will be pretty much the same whereever they go,and are quite happy to go where I drag Them.They know I will not go to T bar pub with no Ale.I bet there are many selfish gets like me!
coxy is bang on, mostly - you also have to take into account pubs where there may be some lovely ladies and unfortunately these more often than not are the fizz factories so you go with the flow and end up drinking crap beer!
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