Brewers defend controversial decision to raise prices
Several national brewers have piled pressure on cash-strapped licensees by cranking up prices for some of their leading brands.
The decision by major players like Coors, Carlsberg-Tetley and Guinness to raise the cost of a keg will see the gulf in price between a pint in a pub and the cost of beer in the off-trade widen further.
The announcements follow an especially cut-throat period of supermarket discounting during Christmas and the New Year, making the price hikes especially hard to swallow.
To make matters worse for publicans, retail analysts claim shoppers are set to see a further fall in take-home prices as supermarkets embark on a fierce new price war.
According to a new study from retail analyst Verdict, competition sparked by the expected takeover of Safeway by Morrisons may lead to the sharpest fall in supermarket prices in more than a decade.
Michael Baines, licensee at the Wadkin Arms in Osgodby, North Yorkshire, fears licensees will be unable to bridge the gap.
"People only have so much money in their pocket and will stay at home. We're already having trouble making ends meet and this doesn't help," he said.
"Brewers stagger their price rises so they don't appear to be working together while pub companies just pass the price on to the publican."
A Carlsberg-Tetley spokesperson said the above-inflation increase in price will be justified in the brand's investment in this year's Six Nations rugby tournament and Euro 2004.
"Most studies suggest consumers place beer, brands and price behind retail standards, atmosphere, quality and safety in their reasons for selecting pubs," he said.
"It is therefore important that as an industry we address those issues most important to consumers.
"At Carlsberg-Tetley we are continuing to invest significantly in making the pub the place to watch sport.
"If we can create an atmosphere where consumers see watching football or rugby in the pub as the next best thing to being there, then we will provide real differentiation for the on-trade experience."
A spokesperson for Diageo said: "This price change to Guinness beer enables Diageo Great Britain to maintain its premium position in the beer market and continue to invest in category initiatives, innovation and advertising and promotional spend."
Colin Pedrick, managing director for on-trade sales at Interbrew UK, which is set to review prices in the spring, added: "The bottom line is that people choose to go out for an experience they can't have at home and they expect to pay more for it.
"Licensees need to focus on adding to and improving the experience they offer to consumers because the quality threshold is forever moving upwards.
"Licensees should also remember that the difference between on-trade and take home pricing is much greater on the Continent."
Who's raising prices?
- Carlsberg-Tetley: raising prices for its ales and lagers by an average of 4.9 per cent from February 16, above the rate of inflation.
Coors Brewers: a rise of around five per cent is being introduced across a portfolio that includes Carling and Grolsch.
Diageo: set to increase the price of a keg of Guinness Draught by £2.09 (a 2.8 per cent rise in line with the current level of inflation.) Diageo is increasing the recommended retail price of a pint of Guinness by six pence.
Related articles:
Carlsberg-Tetley raises prices ahead of inflation (19 January 2004)
Guinness hikes up on-trade price (14 January 2004)
Carling serves up New Year price hike (7 January 2004)
