How is the price of a pint calculated?

Worztron · 14-12-2010 10:07am #1

Hi.

How is the price of a pint calculated?

How much is the tax and what % of the pint price goes to the pub, brewery, etc.?

Surely the high cost cannot be justified. Since shops can sell 6 cans for as low as €5, while a pint in a pub costs at least €4 in most places. :eek:

BeerNut · 14-12-2010 10:49am

Worztron wrote: »

Surely the high cost cannot be justified.

If you've ever bought a pint then you've proved that it can. The market price of anything is what people will pay for it.

Degag · 14-12-2010 4:37pm

It's pretty much split pretty evenly between the Publican, the Brewery and the Government. The Publican's net profit per unit would be much smaller once all costs are attributed though.

Worztron · 14-12-2010 5:36pm

Degag wrote: »

It's pretty much split pretty evenly between the Publican, the Brewery and the Government. The Publican's net profit per unit would be much smaller once all costs are attributed though.

The price is still way too steep though. The price of a pint in most other countries is far cheaper.

Opinicus · 14-12-2010 5:47pm

Degag wrote: »

It's pretty much split pretty evenly between the Publican, the Brewery and the Government. The Publican's net profit per unit would be much smaller once all costs are attributed though.

The taxman takes more like half of the price between vat and duty. The brewery and publican take a quarter each out of which they both have to pay their costs.

BeerNut · 14-12-2010 6:02pm

Opinicus wrote: »

The taxman takes more like half of the price between vat and duty.

Can we see your working out on that?

The highest rate of duty on beer is €15.71 per unit ABV per hectolitre.

So, a hectolitre of beer at 4.2% ABV will incur duty of €65.98. A pint, therefore, incurs 37c. VAT is due on that, so we're up to 45c. There's VAT due on the rest of the pint, of course, but that's proportional to its retail price and won't push it near to the half way mark.

Have I got my maths wrong here, Opinicus? Where did you get "more like half" from?

the beer revolu · 14-12-2010 6:56pm

Worztron wrote: »

The price of a pint in most other countries is far cheaper.

Not really, in my experience.
I often find that pints in pubs costs similar to here in places where pretty much everything else is considerably cheaper.

Opinicus · 14-12-2010 6:56pm

Maybe I shouldn't believe everything that my publican tells me. Maybe he was talking on average. What would the duty on spirits at 40% ABV be?

BeerNut · 14-12-2010 7:57pm

Opinicus wrote: »

Maybe he was talking on average.

No, I'm fairly sure he was lying to you. Or exaggerating for effect. Or really believes the guff the publicans' lobby comes out with. Either way, it's best not to quote something a publican tells you as fact. Same rule for taxi drivers

Opinicus wrote: »

What would the duty on spirits at 40% ABV be?

The rate for spirits is €31.13 per litre of alcohol, so €12.45 for a litre at 40% ABV, so 44c on a 35ml measure, plus VAT.

Geuze · 15-12-2010 3:15pm

Here are the excise rates:

http://www.revenue.ie/en/tax/excise/duties/excise-duty-rates.html

Spirits = 31.13 per litre of alcohol in the spirits

Beer

Exceeding 0.5% volume but not exceeding 1.2% volume = 0.00
Exceeding 1.2% volume but not exceeding 2.8% volume = 7.85 per hectolitre per cent of alcohol in the beer
Exceeding 2.8% volume = 15.71 per hectolitre per cent of alcohol in the beer

Wine

Still and sparkling, not exceeding 5.5% volume = 87.39 per hectolitre
Still, exceeding 5.5% volume but not exceeding 15% volume = 262.24 per hectolitre
Still, exceeding 15% volume = 380.52 per hectolitre
Sparkling, exceeding 5.5% volume = 524.48 per hectolitre

Other Fermented Beverages:

(1) Cider and Perry

Still and sparkling, not exceeding 2.8% volume = 32.93 per hectolitre
Still and sparkling, exceeding 2.8% volume but not exceeding 6% volume = 65.86 per hectolitre
Still and sparkling, exceeding 6.0% volume but not exceeding 8.5% volume = 152.28 per hectolitre
Still, exceeding 8.5% volume = 216.00 per hectolitre
Sparkling, exceeding 8.5% volume = 432.01 per hectolitre

Geuze · 15-12-2010 3:27pm

Standard 4.2% beer has 37.5 cent excise duty.

4.3% = 38 cent.

I'll run through some scenarios:

Pint of Guinness = 3.60 (rural town)

VAT = 62.5 cent
Duty = 37.5 cent

Tax = 1 euro exactly or 27.7% of the retail price.

Pint of Guinness = 3.90 (larger town / city)

VAT = 67.7 cent + duty of 37.5 = tax of 105 cent

Tax = 1.05 or 27% of the retail price

Pint of lager = 4.20

VAT = 73c + duty 38c = tax of 1.11

Tax = 1.11 or 26.4% of the retail price.

Pint = 5.00 (mad Dublin price)

VAT = 87c + duty 38c = 1.25

Tax = 1.25 or 25% of the retail price.

Geuze · 15-12-2010 3:28pm

Opinicus wrote: »

The taxman takes more like half of the price between vat and duty. The brewery and publican take a quarter each out of which they both have to pay their costs.

I show above that tax is 25% to 28% of the retail price.

Geuze · 15-12-2010 3:34pm

Recently, the catering firm at the Aviva stadium threatened to buy Guinness stout from the UK, as Guinness charge less over there.

http://www.sbpost.ie/news/ireland/diageo-cuts-drink-prices-for-aviva-bars-51099.html

"Irish publicans pay €131.66 for a 50-litre keg of Guinness. The ex-duty price of the same keg to the on-trade in Britain is half that, at £54.15 (€66). Even after payment of Irish duty, the cost of importing Guinness to Ireland would be only €99.33 per keg, a saving of 33 per cent."

The 131.66 per 50L keg includes excise duty of 32.99, so the brewer gets 98.67 euro for 50L.

Assuming 88 pints per keg, the brewer gets 1.12 per pint.

Geuze · 15-12-2010 3:36pm

Keg bought from Diageo in the UK (although brewed here!!) = 66 euro + 33 duty = 99 euro.

Keg bought from Diageo IRL = nearly 134 euro.

Guinness charge more here, as they are very dominant.

Geuze · 15-12-2010 3:41pm

Another breakdown:

131.66 per keg = 1.50 per pint

About 1.12/1.13 to the brewer, about 37/38c in duty.

Pub adds another 1.50, that's a 100% mark-up

3.00 + VAT = 3.63 approx.

Brewer = 1.12 or 31%
Tax = 1.00 or 27.5%
Pub = 1.50 or 42%

noby · 15-12-2010 5:24pm

Geuze wrote: »

Another breakdown:

131.66 per keg = 1.50 per pint

About 1.12/1.13 to the brewer, about 37/38c in duty.

Pub adds another 1.50, that's a 100% mark-up

3.00 + VAT = 3.63 approx.

Brewer = 1.12 or 31%
Tax = 1.00 or 27.5%
Pub = 1.50 or 42%

Using these figures, there is also vat due on the keg i.e. 21% of 131.66, or 32cent per pint. This will come off the publican's mark up, so more like:

Brewer = 1.12 or 31%
Tax = 1.32 or 36%
Pub = 1.18 or 33%

My maths mightn't be spot on, bt you can see that it's within the equal split ballpark that Degag mentioned.

Opinicus · 15-12-2010 5:31pm

Geuze wrote: »

Another breakdown:

131.66 per keg = 1.50 per pint

Does the distributer add more to this?
I remember hearing a price quoted more like €170 a keg before.

maximoose · 15-12-2010 5:32pm

the beer revolu wrote: »

Not really, in my experience.
I often find that pints in pubs costs similar to here in places where pretty much everything else is considerably cheaper.

Really?! I'd say that Paris is the ONLY place that I have been where pint prices were similar or more than in Ireland. Everywhere else has been considerably cheaper.

irish_goat · 15-12-2010 5:38pm

Opinicus wrote: »

Does the distributer add more to this?
I remember hearing a price quoted more like €170 a keg before.

€174 for a keg of Guinness up in Donegal.
€186 for a keg of Bud.

BeerNut · 15-12-2010 5:42pm

maximoose wrote: »

Really?! I'd say that Paris is the ONLY place that I have been where pint prices were similar or more than in Ireland. Everywhere else has been considerably cheaper.

Norway, Denmark, Italy and several places in London I've paid higher-than-Irish prices for beer.

kc66 · 15-12-2010 5:56pm

BeerNut wrote: »

Norway, Denmark, Italy and several places in London I've paid higher-than-Irish prices for beer.

I was on a pub crawl in London last week and I would say it is cheaper than Dublin. Averaged around £3.50 per pint of lager, thats less than €4.20. It was a more expensive part of the city I was in (or so I was told).

BeerNut · 15-12-2010 6:05pm

kc66 wrote: »

I would say it is cheaper than Dublin.

I would too. You can get a pint for £1.20 some places. But in others they'll take £4 or £5 off you for a half pint of very very good beer. Hard to find that in Dublin.

Prenderb · 15-12-2010 7:10pm

Don't forget that the publican is running a business. S/He has all of the costs that are involved in running a business, including

Light and heat;
Paying staff (including prsi contributions, maybe training etc);
Premises costs (e.g. planning fees, smoking shelters, maintenance);
Annual licencing costs (solicitors fees etc);
Paying for serving gas;
Security services;

And also has to make a profit to make it worthwhile.

So all of that goes into the mix aswell, and as somebody else said, the pint is only as expensive as the punter is willing to pay for it, all the above (and competition) in consideration.

SteeveeDee · 16-12-2010 1:09am

BeerNut wrote: »

Norway, Denmark, Italy and several places in London I've paid higher-than-Irish prices for beer.

You can add Finland,Sweden,Singapore and Japan to that list also.Last year I paid just over €15 for 2 not so good at all Finnish lagers in Helsinki.I will probably remember it for the rest of my life because I knocked one of the bs****trds over while putting the change into my pocket!:eek:

Indeed,I lived in London for years and could never get used to the varying degrees of pint prices.Lived in the east and worked in town.Sometimes a pint was cheaper in town than in the east and vice versa more of the time but prices also go up a lot throughout the years.The local I frequented in 2006 had London Pride on tap for £2.40,I was there a few weeks back and its a whopping £3.70!This is almost solely due to what the clientele are willing to pay and when the clientele changes so often do the prices..;)

Geuze · 16-12-2010 11:35am

noby wrote: »

Using these figures, there is also vat due on the keg i.e. 21% of 131.66, or 32cent per pint. This will come off the publican's mark up, so more like:

Brewer = 1.12 or 31%
Tax = 1.32 or 36%
Pub = 1.18 or 33%

My maths mightn't be spot on, bt you can see that it's within the equal split ballpark that Degag mentioned.

Just to clarify again:

Price of 50L keg of Guinness, according to the SBP article is 131.66. This includes duty of 32.99. Of course, this is an ex-VAT price.

So the pint arrives to the pub costing 1.50 ex-VAT. This is made up of 37.5 cent in duty and 112.5 cent to the brewer.

Say the pub adds 2.00 euro gross margin, that makes 3.50.

Then add 21% VAT to the 3.50, that means 73.5 cent VAT = final price of 4.235 euro.

(Note that of course the pub will pay 21% to the brewer, but this is netted against the VAT they receive from the customer)

Let's round it off to 4.25 (Dublin price)

Of the 4.25, the breakdown is as follows:

Brewer = 1.125 or 26.5%
Tax = 37.5 + 73.5 =1.11 or 26%
Pub = 2.00 approx or 47% approx.

Geuze · 16-12-2010 11:37am

irish_goat wrote: »

€174 for a keg of Guinness up in Donegal.
€186 for a keg of Bud.

I suspect these costs include 21% VAT.

The SBP article suggests a cost of 131.66 ex-VAT.

noby · 16-12-2010 12:56pm

Geuze wrote: »

Just to clarify again:...

Can you tell I'm not an accountant?

BeerNut · 16-12-2010 1:23pm

So for the micros, then, the maths are the same up to this point, but then the brewery claims back 19c from the Revenue. Does the Revenue then get to keep the VAT that had been paid on the reclaimed duty?

rubadub · 16-12-2010 2:23pm

Geuze wrote: »

I'll run through some scenarios:

Pint of Guinness = 3.60 (rural town)

VAT = 62.5 cent
Duty = 37.5 cent

Tax = 1 euro exactly or 27.7% of the retail price.
.

And the cheapest I know is €2 pints of paulaner (5.5%) in Diceys
VAT 35cent
Duty 49cent
Tax = 84cent

So I reckon they are selling below cost.

BeerNut wrote: »

Norway, Denmark, Italy

I got a pint in Norway for about €9.50, in a normal looking section in the airport. A Italian came to our work and was shocked the drink was so cheap here.

Bigcheeze · 16-12-2010 2:38pm

BeerNut wrote: »

So for the micros, then, the maths are the same up to this point, but then the brewery claims back 19c from the Revenue. Does the Revenue then get to keep the VAT that had been paid on the reclaimed duty?

The VAT is only ever a cost to the end customer. In business to business transactions between pubs and breweries the VAT is charged, paid or reclaimed so there is no net VAT cost to the business.

bog master · 16-12-2010 2:42pm

noby wrote: »

Using these figures, there is also vat due on the keg i.e. 21% of 131.66, or 32cent per pint. This will come off the publican's mark up, so more like:

Brewer = 1.12 or 31%
Tax = 1.32 or 36%
Pub = 1.18 or 33%

My maths mightn't be spot on, bt you can see that it's within the equal split ballpark that Degag mentioned.

Just a small correction.

Sell Pint: 3.60
less VAT -.62
less purchase from Diageo -1.46
PROFIT for Publican 1.52

How is the price of a pint calculated?

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