“How much a pint?” He was middle aged, respectable and probably had a good job. Dressed smart casual he gave the impression he had a nice house and a nice car. “£3.40 a pint? That’s ridiculous!” I suspect he probably does some sort of engineering job. You know, he might well have earned his current position where he sits in his office looking over technical specifications and project timescales because he has worked up from the bottom and gaining his experience the hard way. He could probably still swing a hammer if he had to. Probably well paid but still has his feet firmly in that opinion that beer should not lose sight of its roots. It is the drink of the working classes, drunk in pints and should be priced by the pint.
In the same pub the big brand lager and a well known, and if I were honest, not too bad a representation of a stout, were about the same price as his 6% beer. Bearing in mind the mainstream beers were around 4% ABV I was failing to understand why the gentleman was complaining about the price of the 6% plus craft brewed beer he had ordered.
Very roughly, the cost of making a beer is proportional to the ABV. A stronger beer needs more malt, more hops and the beer duty, for the time being, is very proportional. Actually, from a brewing perspective, I think there is need for even more hops in a balanced strong beer; not only is a stronger hop character needed but the utilization of hops decreases with greater gravities in the copper. Mash efficiencies for that matter drop off as the OG increases.
It is true that there are some base costs that stay the same; Energy perhaps and other key overheads. However, typically a stronger beer needs more time in maturation, wherever that might be. Stronger beer ties up crucial brewery equipment for longer reducing the throughput of the brewery. There is good demand for some of my stronger beers but the time in tank holds up my bread and butter brewing schedule. Strong beer has to pay its share of the overheads to be commercially viable. Time IS money and all that.
“But the pub probably pays less than half the pump price for the beer” I had been trying to communicate to the irate drinker, who in return was trying to defend his right for cheap beer, irrespective of strength. “They can afford to sell me it a bit cheaper than that”.
Well, no. I don’t think that pubs can. Many do because licensees find that they get objections from the likes of our friend here. Pubs that heed the desires of the bargain booze drinkers often get into trouble because they find their overall profitability is cut. The reason is very simple.
Strong beer gets people drunk quicker. No shit Sherlock. Either that or they drink less. I’d like to think that most responsible craft beer drinkers will pace themselves. Perhaps even choose a half. Indeed, I think that beers over 6% are much better presented in an oversized curve bottomed tulip anyway. The standard nonic or straight tapered glass fails to show these beers at their best.
So, let’s assume the licensee is being good to us. Lets suppose he simply puts a straight cash markup on the pint at, say, £1 a pint. Having been a licensee I can categorically state that this is a very charitable mark-up for the pub to be charging on a typical 4% beer. Less and the pub will go out of business. I could expand on this point, but please, for the purpose of this piece, trust me on this one. Remember, this represents the low end budget style pub, the type most reasonable people wouldn’t enjoy anyway. This is the type of pub where they avoid high overheads by cutting back on cleaning staff, avoiding decorating and doing minimum maintenance.
At this cash markup, our 4% beer might be costing the pub £0.901 per pint to buy in, excluding VAT. That’s £1.90 per pint to the punter, excluding VAT. That is £2.30 a pint including VAT and once we round the price to get rid of ghastly copper coins out of the change. Cheap? yeah, but I did say this is in a slum of a pub.
Our 6% beer probably costs the pub £1.22 a pint. £2.22 before we put on the VAT making the retail price £2.65. Remember, this is where the pub is only making the same gross profit amount per pint as they are from a weaker beer. And remember we are still in our bargain basement slum pub.
Lets rework that for a more realistic pub, one that spends a bit more on keeping the décor nice. One where they pay a little more in staff wages to make sure the toilets are clean. The ones where they will call out a plumber if need be to make sure all the toilets flush. The ones that have paid to replace those really crap seats with something a bit more comfortable. Where you might pay £2.60 a pint for session beer.
On a cash markup the 6% beer would retail at £3.05 and an 8% beer, for example, would retail at £3.40. What astounds me is that there are pubs that actually make less mark-up on strong beers and recently I noted my Queboid, 8%, was priced at only £3.00 a pint when 4% beers were around £2.60 a pint.
I would like to think that most readers would think these prices are at best very reasonable. I would also like to think that some enlightened readers will realize the flaw in this pricing structure. Remember, each pint of the beers is contributing exactly the same to the financial viability of the property.
Every bum on every seat of a pub is valuable. Every customer is an asset to a business. Well, until they get so drunk that they piss everyone off. Equally, the establishments that are the more financially healthy are the ones that are busy and maximize the revenue from every bum that sits on the seats and every pair of feet that crosses the threshold.
I was recently told a story by a very experienced world beer bar manager. A customer, it seemed, had been drinking a fairly strong fruit beer all afternoon. This particular customer was negotiating an open stairway, probably with some difficulty, when the aforementioned fruit beer felt it time to make a bid for freedom. Bright red beer made the return journey up oesophagus and then proceeded to cascade through the open stairway onto a nice couple who had only just entered the building for a quiet evening’s drink.
The bar manager felt the only reasonable course of action was to organise a taxi for the unfortunate innocent bystanders, give them a free bottle of something very expensive and apologise with as much humbleness and grovelling as could be mustered by a busy barkeeper. I failed to find out what happened to the drunk, but one can only hope it hurt.
Although the above example is an extreme case of what can go wrong when people drink too much, it has to be said that drunk people are a problem to the very businesses that create them. We all think we are charming when we are actually drunk. The better of us realise the next day that we weren’t, but at the time we fail to acknowledge that to the bar staff, and often other customers, we can be a liability.
In conclusion, drinkers who drink stronger beer probably drink less and so on my cash mark-up model explained above spend less money or alternatively they spend the same amount of money but are more trouble.
But of course, you’re charming when you are out drinking, aren’t you?
For the reason I have given here, I would not expect a 6% beer to retail in any reasonable pub for less than £3.60 a pint. I would not expect an 8% beer to retail for less than £4.20 a pint.
I like strong beer. I like it too much. I like it so much that it gets me into trouble. The last time it got me into trouble I blamed Kwak, and some other Belgian thing that might have been Kasteel Rouge Kriek, I think. Well, it was a Kriek anyway. Apparently, I failed to drink Jaipur and White Shield in the following pub due to my by then intoxicated nature.
I like strong beer but fail to find it often enough. Licensees don’t really like to stock it. Why should they? It doesn’t gain them the same GP per footfall. But I’d be prepared to pay a little more than the standard considered price to ensure I could get it.
As a side note; strong cask beer also sells slower. Although it also keeps a little better and I've know good cellar men to keep 8% beer in good condition for up to 3 weeks, it is not unusual for greater quantities of stronger beers to be thrown away, further reducing profitability of strong beers.
1All the supply prices used for this illustration are based on Hardknott list prices. Obviously different breweries have different prices and nearly all breweries offer various discounts depending on distance, order volume, overall volume and other delivery variables.