Pubcos must defeat brewer opportunism

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Related tags: Beer price rises, Pricing, Time, Price, Brewers

The latest round of wholesale beer price rises comes as a major blow to the bulk of Britain's licensees. With inflation at just over 2%, and most...

The latest round of wholesale beer price rises comes as a major blow to the bulk of Britain's licensees. With inflation at just over 2%, and most other retailers respecting that benchmark, pub customers will be startled to be asked to pay up to 15p extra for their pint, or over three times the rate of inflation. It will be a bold licensee who dares pass on the full increases, even though margins will suffer as a result. Punters are generally having a hard time themselves, or being told that hard times are just around the corner. Off-trade beer prices are continuing to fall, making the disparity between nights in and nights out even sharper. And to really twist the knife for the average licensee, many managed pubs are engaged in a vicious price war on the high street, using special offers on food and drink that make community prices look exorbitant. Tenants and lessees and many freehouses will feel badly let down by their suppliers. The size of the increases seems unjustifiable in the present economic climate. And the fact that they are coming round more than once a year just adds to the sense of being milked by opportunistic brewers who don't understand their customers' problems. Brewers will point to the problems they face too. But to cite pressure from supermarket buyers rings hollow for licensees, who feel the brewers have made a massive rod for their own back by going down the road of massive off-trade discounting. Similarly, brewers pointing to their investment in new pump technology cuts little ice. Isn't investment in quality what manufacturers are expected to do, particularly in competitive times? And as for Wolverhampton & Dudley's pension problems, which it has used as part justification for its price rise, licensees have big enough pension problems of their own to feel much sympathy for that defence. To make matters worse, there's every likelihood that after two years of duty freeze in the Budget, this April will see Gordon Brown add at least a penny to the pint. Faced with these pressures, the giant pubcos will do well to consider holding back the full increases in order to protect their licensees. In most cases, this should not be hard. After all, they have long-term deals that peg any price rises to inflation. To be seen to be exploiting the latest rises in order to increase their own margins, at the expense of hard-pressed licensees, will do neither them nor their trade any favours in the short, medium or long term.

Related topics: Beer

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