Our company operates a small group of 9 pubs, largely in the north east. We are vehemently critical of the irresponsible alcohol pricing policies of supermarkets, which we believe are major causes of our binge drinking culture, alcohol-related health problems and the steady closure of the country’s pubs.
On 7th July 2012, I sent out a press release raising the question of how Tesco supermarkets held and in some cases reduced the price of many of their bottled beers after the beer duty increase in March. I re-print that e mail below for reference. At the time, Tesco were selling the majority of the British bottled beers they stocked at 4 for £6.00.
Today I checked the same Tesco store, in Hexham, Northumberland, to discover that the price of the vast majority of the British beers they stock had been reduced to £5.00 for any 4. A similar scheme applies to their imported beers. This price is absolutely ludicrous. It works out at £12.50 (excluding VAT) a case of 12 bottles, which is much cheaper than even our company can buy at discount, from industry trade prices. And pub operators are expected to make a profit by selling at a mark-up to what they pay for their stock. The alcohol market is clearly massively out of balance. It would be far cheaper for most pubs in the country to buy their stock from the supermarkets.
I checked out the cost structure of a few random beers. Robinsons Old Tom is strong at 8.5%ABV, in 33cl bottles. They are being sold at £1.25 (104.17 pence excluding VAT) each by the 4. The duty on a bottle is 69.10 pence. VAT on the price is 20.83 pence. So the government taxes on a bottle are 89.93 pence out of the selling price of £1.25. So all costs of production, distribution and profit being made by brewer and supermarket come out of 35.07 pence (125 minus 89.93) a bottle. That price – equating to £12.50 (excluding VAT) a case of 12 – is to Joe Public. But the trade price from the brewery is about £19 a case. Need I use an expletive? A bottle contains 2.80 units of alcohol, so if a minimum price of 40 pence per unit were introduced, minimum price would be £1.12, which is way too low. 50p minimum would make the minimum price £1.40.
Greene King’s Morland Old Crafty Hen is 6.5% ABV in 50cl bottles. They are part of the 4 for £5.00 deal. The duty on a bottle is 63.41 pence, so the government taxes on a bottle (duty plus VAT) are 84.24 pence.
It is absolutely impossible for pubs to compete with supermarkets when their prices are so low. Selling very strong beers at £1.25 a 50cl bottle is simply morally wrong.
The minimum price of typical bottles of best bitter, say Taylors Landlord or Thwaites Wainwright, both 4.1% ABV, with 2.05 units of alcohol, would be 82 pence if the minimum was 40 pence per unit, or £1.02 if it were 50 pence. Only 500ml bottles of beers over 6.25% ABV would have selling price affected by a minimum price of 40 pence per unit; this is way stronger than most British beers on supermarket shelves, so such a low minimum price would have virtually no effect on selling prices in supermarkets – or, of course, pubs.
Pubs just cannot compete with these prices – £1.25 a 50cl bottle equates to £304.80 per brewer’s barrel (288 pints ) excluding VAT. Most pub operators in the country could not buy Taylors Landlord, for example, for that price. That applies to dozens and dozens of supermarket beers. The question needs asking – why are Britain’s brewers selling their beers so cheaply to supermarkets that they can be sold for a lower price than a pub operator can buy for? Where does their alliegence lie? With the pub operator or the supermarket?
It is probable that a similar picture would emerge if analysis was to be carried out on imported beers and wines. The same may apply if all the other supermarkets’ pricing was investigated. I suggest the press carry out a detailed investigation and expose of the supermarkets’ dangerous alcohol pricing policies.
The important thing to be clear on here is that it is not just the well known strong cider, vodka, Stella bottles and the like that are thought to be the main culprits when it comes to supermarkets selling cheap alcohol – it is the majority of quality beers that are being sold at irresponsible prices. It is time the government stopped procrastinating about a subject which is gradually leading to greater weaknesses in British society – increased binge drinking, increased health and NHS cost problems associated with alcohol consumption, and the continuing decline of the pub as a place for people to enjoy their leisure time. The supermarkets need much stricter control in their pricing and promotional methods and a high minimum price for alcohol needs introducing as soon as possible.
The Head Of Steam Ltd