Licensees need to be inventive over beer pricing

Licensees need to be more inventive with how they price beer in their pubs, according a senior figure at one of Britain's biggest brewers.

Steve Kitching, managing director on-trade sales at InBev UK, says the way beer is priced in the on-trade is "stuck in the past" and that licensees are missing great profit-making opportunities.

"Some retailers are treating beer like petrol - they have a price point ceiling in mind, which they are wary of breaching," he said.

"It comes down to the fact that many licensees don't realise the elasticity of pricing - what consumers are prepared to pay and why."

Mr Kitching wants to see the establishment of a "ladder of price points" to give licensees the chance to trade consumers up to beers with higher margins.

He says retailers' concern with high prices putting off consumers is misplaced. "Some retailers are concerned that by increasing their prices they may lose some of their business," he said.

"I fully understand this sensitivity because it is a highly-competitive market and consumers have a wide range of leisure options and can also choose to drink at home. However, the fact is pub-goers are not that price-conscious and retailers should maximise the opportunity that this presents."

However, Steve Martin, beer category manager at Punch Taverns, felt that while Mr Kitching's comments had some value, he was not taking into account the popularity of cheap deals in supermarkets.

"In theory the principle is the right one," he said. "However, the expectation of the customer paying more for their liquid may not work. Just look at off-trade volumes and off-trade prices."

There is also concern amongst pub companies that because some of the more premium beers are imported from overseas they have too much cost attached to them.

Myles Doran, marketing manager at Barracuda Group, said: "The costs are so high on some beers that it would mean we would have to put them on at a price point that would be a barrier to entry."