Killing the goose that lays the golden eggs

The Office of National Statistics states that the average price of a pint of draught bitter in 1988 was 91p and that 30 years later in 2018 it was £3.06. We all expect prices to rise, but according to the Bank of England inflation calculator, 91p in 1988 is equivalent to £2.39 in 2018. If inflation had been the only pressure on beer prices, that's what we'd be paying nowadays.

A year ago, YouGov conducted a survey with more than 40,000 respondents and found that beer was on average around 60p dearer than what drinkers considered reasonable. This means that, not just that beer is dearer in real terms, but drinkers feel they are being overcharged for it. How did this come about?

When the big brewers sold off their huge pub estates, most were bought by pub companies, who financed their purchases by mortgaging their newly-acquired properties. The 2007 financial crash then put most pubcos into massive debt; they are however too big to fail or they'd take the lenders down with them. To service these debts, pubcos charge very high rents for pub tenancies and insist the tenants buy their supplies through them, adding mark-ups that can be as much as 100% - just for passing on the order.

Then it was the government's turn. Beer duty has during this period been pushed up by much more than inflation, notwithstanding the odd duty freeze now and then. In addition, business rates, also set by central government, are disproportionately high when compared to other businesses with comparable turnovers. Talk about killing the goose that laid the golden eggs: if pubs are driven to close, they pay no duty or rates at all.

If you ever feel your pint is dearer nowadays in real terms, you're quite correct!

This is from an article I wrote for the CAMRA column in our local papers, the Southport Visiter and Ormskirk Advertiser. Some previous write-ups are here.