Friday, 31 May 2019

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.


  1. Many Londoners, including me, usually avoid pubs when out and about and seek out the nearest Wetherspoons. The price of a pint in other pubs, especially in central London, are approaching extortionate; no wonder London pubs are closing.

  2. Yes, with the price of land in the capital, pubcos don't care whether their London pubs survive or not. If a pub closes, they have a valuable piece of property they can sell for redevelopment at a high price and thus get the equivalent of a huge lottery win.

  3. I started drinking in pubs as a teenager in the late 80s. A pint of Holt's Bitter in my then local was 79p (I remember the kerfuffle in the early 90s when it hit a quid). I was in there again the other day and it's now £3.35, which while not extortionate would have got you four pints thirty years ago, with change. I make that to be an annual increase of about 13%.

    1. 79p in 1988 would equate to £2.09 in 2018, so your Holts has gone up by much more than inflation.


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