Bar Man, December 2, 2016

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SUS-161017-171838001

The cost of your pint is set to soar by 30p. Says who? In my case the information came from the Fleurets newswire which was reporting on a Morning Advertiser article which was based on a piece in the Sunday Times. The reasoning behind the claim was threefold. The price rises caused by the weakening of the pound post Brexit will result in a higher inflation rate, due to the increased price of imported goods, business rates are ‘soaring’ and the higher costs associated with the introduction of the national living wage will all combine in a ‘perfect storm’

The article seems to be based on a press release on behalf of several large pub operating companies including Greene King and Fullers who have apparently told the government that the price of a pint is bound to increase unless they are not sheltered from the economic headwinds. How do these claims add up under scrutiny? As the pound falls, prices of imported goods will rise, however many breweries manage to use local ingredients which do not need to be imported. Norfolk barley has a worldwide reputation of being just about the best you can get. Hops are grown in Britain and I have seen reports of farmers increasing their acreage to respond to the demand, although it will take several years before the new plants are ready to be harvested, so there are likely to be some inflationary effects, but one of the reasons to leave Europe seems to have been to boost the British economy, so a good start would be to use as many home produced ingredients as possible.

Other raw materials are less likely to be imported. Judging from my recent trip to Manchester, there is no shortage of water in this country, and the final component, yeast, multiplies during the fermentation process and the excess is made into products such as Marmite, which has also undergone its own mystery price increase.

As for business rates, a report quoted in the Guardian suggests that the revaluation exercise that has been carried out will hit businesses located in London hard, but those in the North and Midlands will be largely unaffected. There are no large brewers located in central London, the nearest being Fullers in Chiswick. The rest have already moved to cheaper premises outside London or closed. As for the living wage impacting profits, the chief executive of Greene King was paid £2,135,000 in 2014-15. Perhaps the money could be shared out a little more evenly with the employees who aspire to earn £8.45 per hour, though with the increasing mechanisation of the large scale breweries, I would be surprised and disappointed to find that there are many unskilled workers on a minimum wage.

Still, the article claimed that costs are to rise by 4% and this will add 30p to a pint and perhaps, like so many things in this post-truth world, we should just accept it. But before we do, let’s try a bit of simple maths. If the cost of an average pint is £3.50, then 4% comes out at a 14p increase, so where does the 30p figure come from? It seems that we live in an age when any claim made in the media is accepted without question by a large majority of the population, but perhaps I am old fashioned and like to check out the veracity of claims made.

So what’s my verdict? Costs for brewers will rise, but 
not by 4% and even if they do, it doesn’t justify 30p on a 
pint.

C- and extra homework.