Pub trade in decline: role of Diageo / Heineken

Geuze

Across the country, pub trade is under pressure.

http://www.galwaynews.ie/20481-hundred-galway-pubs-will-be-left-without-licence


Less customers, less spend, etc.

Some people point to excessive prices for beer as part of the problem, especially compared to the 33cl bottles available in supermarkets for 1 euro and less.

Others say that pubs must respond with offers / music / food / new ideas, etc.

However, I want to highlight the role of the brewers.

They charge 30% more here than in the UK, for beer brewed here.

Yet when many of their customers are in trouble, they haven't cut their prices to the pubs.

How are pubs to cut their prices if the brewers don't help them by cutting their prices??

While I did criticise the pubs for being too greedy several years ago, I now have a certain sympathy with them, and I point the finger at the two main brewers, guilty of keeping prices too high.

BeerNut

If pubs don't want to buy beer from those two brewers they don't have to.

If they feel they must carry beer from the Big Two then the Big Two can charge what they like. That's business.

_blank_

If pubs had more choice I'd go to pubs more. I just don't want to go out and spend a fortune on overpriced swill any more.

When I do go out, I always try to edge my friends toward a pub with a bit of choice in it, and in fairness, the pub I would usually frequent for drinks with friends has started to stock a pretty decent range of beers, for a pub in the suburbs, namely Harry Byrnes.

Technocentral

The problem isn't that there are too few pubs in general (unless you work in them maybe) the problem is that only a very small amount of them sell anything thats worth drinking.

deei

Geuze wrote: »

Across the country, pub trade is under pressure.

http://www.galwaynews.ie/20481-hundred-galway-pubs-will-be-left-without-licence


Less customers, less spend, etc.

Some people point to excessive prices for beer as part of the problem, especially compared to the 33cl bottles available in supermarkets for 1 euro and less.

Others say that pubs must respond with offers / music / food / new ideas, etc.

However, I want to highlight the role of the brewers.

They charge 30% more here than in the UK, for beer brewed here.

Yet when many of their customers are in trouble, they haven't cut their prices to the pubs.

How are pubs to cut their prices if the brewers don't help them by cutting their prices??

While I did criticise the pubs for being too greedy several years ago, I now have a certain sympathy with them, and I point the finger at the two main brewers, guilty of keeping prices too high.

Its not the brewers thats keeping costs high,they have also got high wages etc to pay..
As far as Im aware the price of a pint is approx 5euro, the brewer gets about a euro of that!
Though maybe you can provide a link to suggest otherwise?
The UK charge less as they have pay less in staff/rates/rents etc.

Geuze

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

http://www.sbpost.ie/news/ireland/di...ars-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."


Price in Ireland
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 charges 1.12 per pint.


Price in UK

Keg bought from Diageo in the UK (although brewed here!!) is 54.15 stg. That's about 66 euro, or about 75c per pint.


Diageo charge more here, as they are very dominant.

Geuze

BeerNut wrote: »

If pubs don't want to buy beer from those two brewers they don't have to.

If they feel they must carry beer from the Big Two then the Big Two can charge what they like. That's business.

Beernut, while it's true that a pub doesn't have to carry Diageo / Heineken products, it's naive and unrealistic to suggest that thousands of pubs could follow this strategy.

My point is these two dominant brewers don't seem to be doing much to help the pubs.

Some pubs have Guinness at 3.00, but I wonder is Diageo sharing some of the lost margin (I doubt it).

The supermarkets sell 33cl bottles at 1 euro and less retail prices, while pubs complain that the cost price to them is higher than 1 euro

So why don't the brewers reduce their 33cl bottles prices to the pubs, to help the pubs compete?

BeerNut

Geuze wrote: »

it's naive and unrealistic to suggest that thousands of pubs could follow this strategy.

Only as naive and unrealistic as Diageo and Heineken charging pubs less than the market rate for their products.

Geuze wrote: »

My point is these two dominant brewers don't seem to be doing much to help the pubs.

My question is: as long as their own figures are OK, why would they? They're multinational corporations, not charities or community groups.

Geuze wrote: »

So why don't the brewers reduce their 33cl bottles prices to the pubs, to help the pubs compete?

Because they're making enough money as it is, thanks very much. And they've had their maths done -- most likely by some very smart, clever and expensive accountants and business consultants -- and reckon the price positioning is where it should be for them to keep making money and keep their shareholders happy. Which is their sole reason for existence.

If they could make more money by cutting their prices, they would. They're not stupid.

deei

Geuze wrote: »

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


"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."

Price in Ireland
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 charges 1.12 per pint.


Price in UK

Keg bought from Diageo in the UK (although brewed here!!) is 54.15 stg. That's about 66 euro, or about 75c per pint.


Diageo charge more here, as they are very dominant.

Have you researched why this is the case?
Id hazzard a guess that the production costs are a lot less in the UK.
That the rates/rents etc are a lot less in the UK.
And most importantly the cost of employing someone is much less than here.

Its simple logic its called ..COSTS!

BeerNut

deei wrote: »

Id hazzard a guess that the production costs are a lot less in the UK.

The UK's Guinness is all produced in Dublin.

johnnyskeleton

I think there are numerous reasons why the pubs are in decline and there is no one specific culprit. The best way I can describe it is that people are no longer prepared to spend the money being asked by the pubs for the service that they provide.

In retrospect, it is amazing how much money that pubs were making over the last few years.

Equally, what is plain to see is that pubs that offer a niche product, whether that be live music, no music no television just chat, lots of sport, craft beers, decent wines, fine whiskeys, cheap drinks, good smoking area, themed nights, etc etc do a roaring trade at the moment.

Quite simply, discerning purchasers will pay premium prices for a top quality product (e.g. live music, good beer, good smoking area places) and savvy consumers will consume large quantities of a cheap product (e.g. drinks promotions). There will also always be a market for the more money than sense crowd always looking for the "in" venue. Likewise, local pubs that never tried to be anything different will still attract the locals. These pubs are by and large doing well.

But outside of that, there is little reason to frequent a lot of pubs, especially the noisy, overpriced, poor service, smelly, bad pints, no smoking section, unconfortable places. These are the pubs that are in trouble.

Fuzzy Clam

Geuze wrote: »

"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."


[

Don't those charges include the gas supplied and support etc.?

irish_goat

Fuzzy Clam wrote: »

Don't those charges include the gas supplied and support etc.?

Diageo clean the lines and provide the coolers etc but gas is supplied by another company, usually BOC.

Fuzzy Clam

irish_goat wrote: »

Diageo clean the lines and provide the coolers etc but gas is supplied by another company, usually BOC.

And paid for by Guinness and inc. in the price. At least it used to be when I was in the business.

If a caterer/publican brings in their own beer, they would have to buy the gas from BOC or AirProducts.

Adyx

Fuzzy Clam wrote: »

And paid for by Guinness and inc. in the price. At least it used to be when I was in the business.

If a caterer/publican brings in their own beer, they would have to buy the gas from BOC or AirProducts.

They don't pay for the gas. Why would they when Heineken, Bulmers and whatever else you're having use the same gas?

Fuzzy Clam

Adyx wrote: »

They don't pay for the gas. Why would they when Heineken, Bulmers and whatever else you're having use the same gas?

Who don't pay for the gas?

Corsendonk

Are beer mats free?

Adyx

Fuzzy Clam wrote: »

Who don't pay for the gas?

Diageo.

Fuzzy Clam

Adyx wrote: »

Diageo.

Ok. Things must have changed since I worked for BOC Sureflow. Gas must be free now.

Berty

Fuzzy Clam wrote: »

Who don't pay for the gas?

Fuzzy Clam wrote: »

Ok. Things must have changed since I worked for BOC Sureflow. Gas must be free now.

Gas is never free. It is built into the price of a keg by most suppliers. The cylinder costs money to fill and costs money to rent.

Fuzzy Clam

Beer Baron wrote: »

Gas is never free. It is built into the price of a keg by most suppliers. The cylinder costs money to fill and costs money to rent.

I am well aware of that;)

It's Adyx who doesn't think the gas is paid for by the brewers. I assumed since he picked on my point, he must know more about it.
Anyway, for his benefit
In a shared gas system, the cost is shared proportionately by the brewers and paid to BOC. This includes emergency call outs etc. The publican does not have an account with BOC. Diagio do not pay for other brewers gas.

Not all pubs use a shared system however. Smaller, usually country,pubs have separate gas for Diageo/Heiniken,Showerings. This is not relevant. BOC supply for Guinness products and Showerings and Heiniken for their own. There may be exceptions to this.

My original point which seems to have missed is that if an outlet decides to bring in their own beer, Diagio Irl are not going to supply the gas and support. Hence the cost of importing a keg is not comparable.

deei

BeerNut wrote: »

The UK's Guinness is all produced in Dublin.

Virtually all Irish goods are sold into the UK at a lower price point than they are here. Most multinationals adopt a variable pricing strategy across their international markets...I read somewhere that Diageo sells a lot more Guinness in the UK than it does here - I guess that gives the big customers there greater leverage to negotiate lower prices.

BeerNut

deei wrote: »

I guess that gives the big customers there greater leverage to negotiate lower prices.

Significantly also many of them wouldn't see Guinness as a must-carry beer. If it's too expensive, they can drop it. Pubs in Ireland are much less likely to do that, handing Diageo free rein to charge what they feel like.

Adyx

Fuzzy Clam wrote: »

I am well aware of that;)

It's Adyx who doesn't think the gas is paid for by the brewers. I assumed since he picked on my point, he must know more about it.
Anyway, for his benefit
In a shared gas system, the cost is shared proportionately by the brewers and paid to BOC. This includes emergency call outs etc. The publican does not have an account with BOC. Diagio do not pay for other brewers gas.

Not all pubs use a shared system however. Smaller, usually country,pubs have separate gas for Diageo/Heiniken,Showerings. This is not relevant. BOC supply for Guinness products and Showerings and Heiniken for their own. There may be exceptions to this.

My original point which seems to have missed is that if an outlet decides to bring in their own beer, Diagio Irl are not going to supply the gas and support. Hence the cost of importing a keg is not comparable.

If I'm wrong I'll hold my hand up to that and bow to your superior knowledge. However my original post was a reply to a post by you that seemed to imply Diageo paid BOC for all the gas used by the publican. Once again you have my utmost apologies.

_blank_

Fuzzy Clam wrote: »

Ok. Things must have changed since I worked for BOC Sureflow. Gas must be free now.

You probably know my cousin MK

rubadub

Geuze wrote: »

Yet when many of their customers are in trouble, they haven't cut their prices to the pubs.

Geuze wrote: »

So why don't the brewers reduce their 33cl bottles prices to the pubs, to help the pubs compete?

I wonder if they really are concerned much. The end consumer will still by the beer, from a supermarket or off licence. It would be sort of like saying farmers or meat wholesalers should be helping struggling restaurants by supplying cheaper meat.

Geuze wrote: »

Beernut, while it's true that a pub doesn't have to carry Diageo / Heineken products, it's naive and unrealistic to suggest that thousands of pubs could follow this strategy.

I don't think its unrealistic, I have been in quite a few pubs with no guinness on sale and they were doing very well. Many publicans do still have oddball ideas, like stuff won't sell, or they would be screwed without some beers. In recent years I have heard of many people changing to cheaper pints and ditching their "usual". I see tuborg, tennants & fosters in more and more pubs, there is usually a €1 difference, between say carlsberg and tuborg though they are both brewed in james gate as far as I know.

Lazy Bhoy

Tuborg is only €3.00 a pint now in a lot of pubs.

Very reasonable

Fuzzy Clam

Adyx wrote: »

If I'm wrong I'll hold my hand up to that and bow to your superior knowledge. However my original post was a reply to a post by you that seemed to imply Diageo paid BOC for all the gas used by the publican. Once again you have my utmost apologies.

Sorry, I didn't mean to sound condesending. I hope my reply cleared up any misunderstanding:)

Fuzzy Clam

Des wrote: »

You probably know my cousin MK

I was contracted to them so possibly. It's a while back now.