An artisanally crafted blog curated by Cooking Lager for discerning readers of beer bloggery

Monday, 10 January 2011

A question of price


Something fascinating from the Guardian. Not often you can say that. Ignoring the authors point about “lager swilling losers”, there is some interesting statistics regarding the rise of pub based prices. Now all prices rise over time, but pub price inflation is higher than both general inflation and wage inflation and has been for some time. In prosperous times you would expect wage inflation to exceed general inflation, that people get more prosperous. In current economic times you can observe price inflation exceeding wage inflation as a sign of falling prosperity.

Many reasons are given for the decline of pubs, from smoking bans to changing behaviour and customer expectations. There are those drinkers that may have a love of the pub that goes beyond regular drinkers, and consider the pub something to be protected. These people may indeed be prepared to pay an ever increasing proportion of their income to “support” pubs. There are even some odd types that think people need to be “educated” to appreciate pubs more and be prepared to pay more for them. I would hypothesis that most people fall into the category that I belong to. That of quite enjoying a pub that fulfils my own basic criteria of being clean and nicely furnished and welcoming to all but really isn’t that interested in sinking a lot on a school night. Someone that enjoys a drink as part of a wider set of interests. If pubs become ever more expensive we will use pubs less. That our hard earned income is for the purpose of enjoying our own lives and not “supporting” any given industry, especially one that seeks to give us ever poorer value. It is no surprise to me that arguably the most noteworthy success story of the pub industry is J D Wetherspoons, a company that offers comparatively lower prices than the competition.

So when contemplating the decline of pubs and lamenting the propensity of those of us who enjoy cheap supermarket alcohol and drink occasionally in cheap pubs, please do not seek a legislative answer. Please do not think for one minute that price controls will save the Great British Pub. Out of my monthly take home pay there is only so much of it I am prepared to hand over for the privilege of boozing. I have a world of other expenses I choose to spend my money on that give me as much pleasure, if not more, than visiting a pub or having a drink.

Oh the stats :-

PRICE OF A PINT

1981 57P

1991 140P

2001 204P

2011 306P

35 comments:

Darren said...

I'm sure you will prove me wrony but I belive that Thatcher stuffed up your pubs/breweries in the UK with some legislative solution back when the wheel was a new thing. Something that stopped breweries from owning lots of pubs?
Anyway I'm always happy to pay a bit more for a good beer, be it in a pub or a bottle shop. My brother in law is constantly telling me what a good deal he got on some awesome beer, usually shit like Corona or Stella, makes me sad that he'd buy that shit rather than support a local brewery with good beer or just a local bottle shop with decent beer. I am a homebrewer so may appear to be in the tight arse brigade but i spend more on beer than I care to count up. Beer is worth it, dont stinge!

Darren said...

I'm sure you will prove me wrony but I belive that Thatcher stuffed up your pubs/breweries in the UK with some legislative solution back when the wheel was a new thing. Something that stopped breweries from owning lots of pubs?
Anyway I'm always happy to pay a bit more for a good beer, be it in a pub or a bottle shop. My brother in law is constantly telling me what a good deal he got on some awesome beer, usually shit like Corona or Stella, makes me sad that he'd buy that shit rather than support a local brewery with good beer or just a local bottle shop with decent beer. I am a homebrewer so may appear to be in the tight arse brigade but i spend more on beer than I care to count up. Beer is worth it, dont stinge!

Darren said...

damn this double posting shit, I think my computer is fucked up. dont remember spilling beer on it?

Cooking Lager said...

I thank you for it, Darren. It makes this tosh appear "popular"

Tandleman said...

The main problem with rising prices in pubs is debt. The pubs we drink in are mortgaged, remortgaged and mortgaged again to the hilt. The prices increases are to service that debt. It also explains why pub prices rise more than general ones.

That and a good dose of greed. It would have been good if your table could show what the prices ought to be if it was just rising by the same rate as other businesses.

Darren said...

no probs Cooky, always glad to share my computer problems with others. No doubt will do that tomorrow when I'm back in the office. So for now I drink good homebrew beer and swear at my computer. And remember its better to be cool rather than popular, what ever tosh is?

Cooking Lager said...

Had I been more inclined, Tand, you are correct to note that my argument may be better if I provided average earnings, and inflation data.

However general inflation has been low since the the end of the 1980's, with wage inflation exceeding it, only recently reversing.

I would point to anecdotal evidence of observing the price of a can of beans, loaf of bread, big mac, pint of milk, t shirt, and suggest that my point of pub price inflation being higher is valid. This I would also suggest as a reason for decline, though grant it is one reason. My further argument is that applying legislative inflation to the off trade would not increase on trade footfall.

Darren said...

Oh dear, you're not an ecconomist are you Cooky?

Cooking Lager said...

We are all economists, Darren. We all earn and spend as we all seek prosperity, necking the odd can of cheap lager along the way.

Darren said...

again, oh dear. Take any lawyer joke and replace lawyer with ecconomist. Still you like beer, can't be all that bad. Time and perseverance will see you to the way of the good beer. You being a true tight arse and all should become a home brewer!

Darren said...

again, oh dear. Take any lawyer joke and replace lawyer with ecconomist. Still you like beer, can't be all that bad. Time and perseverance will see you to the way of the good beer. You being a true tight arse and all should become a home brewer!

Darren said...

fucking computer

Fishter said...

According to http://www.thisismoney.co.uk/historic-inflation-calculator

57p in 1981 is approximately £1.80 today. So beer prices in pubs are well above the natural inflationary rise.

Cooking Lager said...

Thank you Fishter!

Darren said...

but is the vaule proposition of the beer better than it was in 1981. Actually I was 4 then and drinking coke rather than beer then so I really dont know. And the AU$ is way different to the UK pound/Euro so I really dont know, but I dont mind paying for good beer. Stump up tightwads!

Cooking Lager said...

I think you are making a different argument, Darren. The quality of mainstream UK beer is little different this decade than it was last. It is just more expensive. If the price of driving rises over a period of time, you can expect less of it. Over the past decades it has become relatively cheaper. My father bought his first car aged 30. I bought mine in the last year of my undergraduate degree. It is now not unusual to see 6th form students (17-18 year olds) in the UK drive to college. Something that in my observation is a quite recent thing in the UK but something the film industry has led me to believe has been common in America for decades.

Pricey geeky beer may be an affordable luxury that is gaining in popularity. It is still a small niche and in my opinion will remain one. Pointing this out is about as popular as also pointing out the beer brand that brought the concept of affordable luxury to the UK beer market was good old Stella.

My blog is many things. It is a piss take of beer geekery; it is a bit of fun and harmless joshing. I also try from time to time to make the point that minimum pricing is the wrong approach to any and all problems it is directed towards. In this case pointing out that a better approach to saving pubs is to notice how comparatively they represent poorer value than they used to. Tandy is correct to note the reasons, but the solution is to solve those problems and bring pub prices down. Then pubs may prosper. Contrary to much I’ve said on this blog I do not celebrate the decline of pubs, I just don’t wish to “support” them.

Tyson said...
This comment has been removed by the author.
Tyson said...

Contrary to much I’ve said on this blog I do not celebrate the decline of pubs, I just don’t wish to “support” them.

I know what you mean. I didn't want to support RBS to the tune of £20 billion, but then no one gave me a choice.

Whorst said...

Be nice to hear Avery and Brown's response to this.

Curmudgeon said...

It is still the case, though, that some of the most conspicuously successful pubs charge the highest prices. It isn't such a straightforward equation as you make out, and of course the reasons for the long-term decline of the pub trade go far beyond price alone.

Cooking Lager said...

Can I disagree with you Mudge? Yes I can. I do not dispute any developed market is diverse and sophisticated. There is no one entity called "the pub", but a range of establishments of different quality and price.

Nor would I dispute there is propensity for some people to rub shoulders with "their sort" and prefer places that keep the "riff raff" out via price. Nice expensive pubs full of nice middle class people. Nor would such establishments be the first to suffer from high price inflation. I would suspect they would weather it better.

Noticing one or two pubs do well out of multi beer bars & £3-4 pints providing for a small market of high value customers in prosperous areas ignores the wider market.

If you are saying the pub market has to remain in a cycle of ever poorer customer value, then that market will have both fewer pubs & successful pubs at the higher end for those customers willing and able to pay top dollar.

If the price of cars were to double, it would hit the market for cheaper cars with price sensitive customers. Customers at the higher end tend to be more resilient, though the overall market for cars would decline.

If the overall value of a trip to the pub for customers continues to decline via ever higher prices, expect the market to continue to shrink, as people visit less often.

Ghost Drinker said...

Don't know about all these 6th fomrm kiddies getting cars but I don't think I'll be able to afford one till I'm over 30! Sucks having to spend all your cash on booze! (or does it? ;))

Dick Puddlecote said...

I'd pay those prices to be sat opposite the Emma Bunton looky-likey in your shot, Cookie.

But then, I'd lose my seat once I popped outside so perhaps I'll stay here where it's warm and state-free. ;)

Curmudgeon said...

You do have a point, Cookie, that over the years there has been a kind of lazy assumption in large parts of the pub trade that they can keep on increasing prices a little bit above inflation and nobody will notice. Then a combination of Spoons, recession and smoking ban bite them on the bum.

Over the past thirty years there has been a huge expansion in "budget" restaurants. There has been a boom in eating out. And I'd like to bet that food prices haven't increased anywhere near as much as on-trade beer prices, despite both including a significant wage-related service element.

Tim said...

@Mudgie said "of course the reasons for the long-term decline of the pub trade go far beyond price alone."

Is this just another way indirectly blaming the smoking ban on pubs closing and the price of beer rising?

Flagon of Ale said...

The lack of data on shitty-beer prices here seems to jump out at me. I would guess that cooking-lager prices have also increased more than say, t-shirts and oranges (although maybe not as much as in pubs and bars) because beer in general has gotten more expensive for a number reasons.

Darren said...

I may be on a slightly diferent track Cooky as I can only speak for the Austrailan beer scene. Here we have a bunch of ordinary industrial lagers (probably your kind of beer) that portray themselves as premium beers where you get overcharged to buggery in pubs, then can buy for bargain basement prices at the supermarket.
The good stuff is priced a little more consistently. I'm not going to try and do the time price comparison thing but we do have one group of beer selling establishments where the price of beer has stayed at 1970's prices, Lawn Bowles Clubs. These old codgers keep the price of beer at rock bottom prices. A stubbie of VB or Carlton Draught usually sells for about $5-7 AU in pubs, perhaps up to $10. At the Cressy Bowling Club in Victoria, near my parents farm its $3 a stubbie (375ml bottle). My Uncle is the current president and Dad a past treasurer, I tried to pursuade them to at least go to $4 but all to no avail.
So Cooky when in Australia drink in Lawn Bowles Clubs.

Cooking Lager said...

@Flagon

Cooking Lager prices in the off trade used to be priced far higher in both absolute & relative terms. A can of widget beer would easily be near in price to a pub pint. After "Calais", which all cooking lager enthusiasts see as the land mark. When people collected tokens from the Sun newspaper and went to france for £1 and came back with crates of cheap Stella, British Supermarkets responded. British supermarket prices have been kept low ever since as supermarkets realised that cheap grog generates footfall for grocery sales. More low margin than loss leading but the British cooking lager enthusiast has been winning for decades.

Pub customers on the other hand have been stumping up above inflation price rises for decades. Now wage inflation is below price inflation and pub prices are rising further, the British pub is all but dead save for a few historical relics that CAMRA types frequent.

Cooking Lager said...

@Mudge, As spoons is the McPub, look at the prices in UK MacDonalds over the past decade. From around £2.99 (when a pint was near £1.50) to about £3.50 now (when a pint is near £3) for Big Mac, drink and fries. The Big Mac Meal once cost 2 pints. It now costs a pint.

Inflation may be the devaluation of money rather than rising prices as descibed in "When Money Dies", but imagine the rate of inflation if we measured it by pub prices?

Curmudgeon said...

My rough recollection is that in the early 80s the price of a reasonable quality pub meal was about 5 times the price of a pint (pint 50p, meal £2.50). Now it's more like 3 times (pint £2.75, meal £7.99). The same is true of Spoons where the real ales are now around £2 and the "quality" meals around £6.

I am Stan said...

Yo CL,

I took my squeeze to the Savoy Cinema last night (Little Fockers), its a small independant cinema here in Nottingham with its own little bar,5 quid for two large bottles of Magners, not bad eh!, plus you can take it into the screening with you.

Afterwards we went to a city centre boozer, the best part of 8 quid for a glass of house white wine and half a Guiness....BAH!

Cooking Lager said...

@Stan

http://www.jdwetherspoon.co.uk/home/pubs/the-ernehale

I am Stan said...

Thanks for the link CL,

I`ve been there with my squeeze a couple of times,usually when we`ve been to the nearby Asda, or the Greek restaurant.

HardKnott Dave said...

I think there are a lot of complicated economics surround The Pub(TM) many of the operating costs have increased significantly for instance. Couple with that the fact that footfall has decreased and moreover, drinking mid week has significantly decreased there are a lot of challenges to pubs.

Many cost effective pubs were also grubby down market places, as peoples preferences for more pleasurable environments became a driver many pubs increased quality and so increased costs (a makeover costing several £100k has to be paid for)

It is pointed out that more expensive pubs can often do better and it is the cheap ones that die.

For me, let the market choose, Wetherspoons is obviously successful and then there are many others charging far more - it's diverse and that's good. But pubs are not the same animal they were in 1981.

It would be interesting to compare pub prices with petrol prices - I suspect they show similar trends.

Cooking Lager said...

Interesting points Dave, especially that price rises are a result rather than cause of the declining market for pubs. Though one we will have to differ on. If pub costs in general have increased it doesn’t explain the ability of low priced operators to operate reasonably decent venues. I’ve been in Sam Smiths and Wetherspoons that may not be palaces, but are far from being either dumps or the tattiest examples in their areas. As for saying the costs of refurbishments are passed on, yes sure, but regular refurbishment and maintenance of asset values is an ongoing cost to all business. You would expect that to be part of an ongoing inflationary price rise, but above inflation? If that is the case then future necessary refurbishments will have to continue a pattern of high price hikes above inflation making a trip to the pub ever less value. In your argument pubs have a structural problem to the business model that make them all ultimately unviable. It’s just a matter of time before every pub has to charge a price no customer will pay. Tandy’s explanation of poor management, unwise choice of capital structure and greed has more resonance. My argument isn’t that this is the only reason for the decline of pubs but a significant contributory factor. One I would place above smoking bans and the like. As for supporting pubs, I have no problem with those that choose to do so and would suspect that those pubs that cater for that type of pub supporting CAMRA customer to be able to support high prices and remain viable. Taking money off mugs is the best business to be in. So long as the price of a pint continues to rise above price inflation, above wage inflation, the pub offer looks less and less attractive to regular customers. By regular I mean those that like a drink but see drink as an optional pleasure and have little interest in paying top dollar for specialist beer, wine or whisky.