How much profit does a pub make on a pint ?

P_1

For all the criticism of Diageo thats out there you do have to admit that how they got to such a dominant position in the drinks industry is pretty admirable.

rubadub

Rabies wrote: »

The bar my g/f works at buys Hein from the supermarket because it is cheaper than wholesale. Thats wrong.

What do you mean by "thats wrong"? I have a friend who works in a pub too and gets the 20 pack bottles in all the time.

Rabies wrote: »

Supermarkets don't like selling to bars here.
It's not looked at favorably.

Who tells you this? what is "unfavorable" about it?
I expect the local centra selling the heineken loves to see my mates boss loading up loads of boxes of beer, which is obviously not below cost.

Rabies wrote: »

I used to work for a chain of bars. We had massive buying power. Got some of the best prices in the country. Still couldn't match the supermarkets on going price.

How did you conclude that you had the best prices? did your competitors actually disclose what they paid (which would be highly unusual). I know where I work they would love to get their hands on competitors accounting information, we have no idea what they pay for components etc, just as my company would never disclose our selling prices to various customers, who do get charged wildly different prices.

minidazzler

Frynge wrote: »

The price of a keg in Ireland is the exact same for everyone. I will post them if people want, depending on where in the country you are the margins range from 40% - 70% but most are in the 50%-60% ie €4-€4.5 for stout/ale.

I'd be interested to hear the prices. Give a breakdown; Cork, Dublin, Galway and Donegal? Thanks

Geuze

Frynge wrote: »

The price of a keg in Ireland is the exact same for everyone. I will post them if people want, depending on where in the country you are the margins range from 40% - 70% but most are in the 50%-60% ie €4-€4.5 for stout/ale.

I would love to hear the exact pre-VAT price of a 50L keg of beer - various brands.

Geuze

Frynge wrote: »

Yes they do and how they work is;

More than €8000 purchased will get a 1.75% rebate once a year as a credit note
More than €26000 purchased will get 6% rebate
Up to €150000 which gets a 14% rebate

Figures are prob not exact but should be fairly close.

OK, to be clear, can you confirm that pubs get rebates from brewers based on figures like the above?

I suspected as much.

So if a pub pays x + VAT for a keg, and assuming they are a busy pub, they get an annual rebate of (0.14)(x)?

Geuze

Sofiztikated wrote: »

, we sell Diageo products in every one. Still costs us €150-€170 a keg. There is nowhere else for us to get that product. The paying majority want Diageo products.

This suggests huge profit margins being earned by Diageo.

BeerNut

Geuze wrote: »

This suggests huge profit margins being earned by Diageo.

Not if you subtract the amount they pay for advertising and sponsorship, I'd say. Their 2012 Annual Report shows that Diageo took in just under £3 billion in Europe, but made a mere 3% profit on that, walking away with a trifling £966,000,000. Hardly worth getting out of bed for...

enda1

BeerNut wrote: »

Not if you subtract the amount they pay for advertising and sponsorship, I'd say. Their 2012 Annual Report shows that Diageo took in just under £3 billion in Europe, but made a mere 3% profit on that, walking away with a trifling £966,000,000. Hardly worth getting out of bed for...

Maybe you mean a trifling £96,600,000 for it to be 3%?!

Pocket change

BeerNut

enda1 wrote: »

Maybe you mean a trifling £96,600,000 for it to be 3%?!

Oh yeah

Page 29 says net sales were £2,949,000,000 and operating profit was £966,000,000, but page 6 gives the operating profit at 3%.

I dunno. My point really was that if you're interested in how much profit Diageo makes, the figures are out there.

enda1

BeerNut wrote: »

Oh yeah

Page 29 says net sales were £2,949,000,000 and operating profit was £966,000,000, but page 6 gives the operating profit at 3%.

I dunno. My point really was that if you're interested in how much profit Diageo makes, the figures are out there.

True enough.

Profit margins are rarely high at the end of the day. The problem in the Irish pub trade is that there are just so many people taking a margin that these accumulate to be a lot. That combined with terrible inefficiencies, a kartel-like grip by Diagio, a kartel-like stranglehold like Vinter's and a terrible consumer inertia about their brands.

Overall in this thread there has been a shocking misunderstanding of the word profit though (not aimed at you)!

BeerNut

I'm innumerate, not illiterate :cool:

P_1

Have to say that a 3% profit margin is surprisingly low.

Sure you'd almost get that by leaving the money in the bank

Sky King

You pay tax on profits, not turnover. Keeping low book profits is often done for this reason.

blackdog2

Haven't read through the thread, but I know a manager of a bar, who was being ridden by the council taxes levied upon him for no particular service availed (a country pub, had to pay for lighting that faced the road himself, had to pay for water/disposal himself), so of a pint at 4 euro, he made about 60 cent, which didn't cover the mortgage that was on the pub at the time

Cookie_Monster

Rabies wrote: »

Anyway, here are some pics from my super market trip.
Heineken 24pk wasn't on special. Was changed to the NZ equivalent of Steinlager. Prob swap back next week.

None of those are particularly good value either IMO. $1.50 a bottle is good, any more is standard. Beer is so bloody expensive here and you can't get proper sized can either, bottles are always more expensive.

Rabies

Cookie_Monster wrote: »

None of those are particularly good value either IMO. $1.50 a bottle is good, any more is standard. Beer is so bloody expensive here and you can't get proper sized can either, bottles are always more expensive.

I agree.
The average market price in a bar is crazy.

What I see is

Standard bottle beer/cider: $8.50-$9 (330ml)
"Premium" bottle beer/cider : $9-$16 (330ml or 500ml)

Basic house spirits: $8-$9
Standard back bar spirits $9-$13

At least mixers are always free here, only thing going for it if you're a spirit drinker.

Jumboman

I wonder how O'Reilly's and MacTurcaills in Dublin city centre are able to sell pints for 3.30 and 3.60 ?



http://publin.ie/2011/sub-lounge-oreillys/


http://publin.ie/2011/macturcaills-2/

Frynge

minidazzler wrote: »

I'd be interested to hear the prices. Give a breakdown; Cork, Dublin, Galway and Donegal? Thanks

There is no breakdown there is the same price for everyone from the brewery

Geuze wrote: »

I would love to hear the exact pre-VAT price of a 50L keg of beer - various brands.

I will get it and put it up later.

Geuze wrote: »

OK, to be clear, can you confirm that pubs get rebates from brewers based on figures like the above?

I suspected as much.

So if a pub pays x + VAT for a keg, and assuming they are a busy pub, they get an annual rebate of (0.14)(x)?

Yes, pubs get rebates based on the amount of business they give the brewery. They also get rebates on the amount of tea and coffee they buy in, this is a some what standard business practice in all sectors.

Consumers also avail of such rebates from there club cards in supermarkets.

rubadub

Frynge wrote: »

The price of a keg in Ireland is the exact same for everyone.

How do you know this? And are you talking only about diageo, I doubt all breweries follow each others accounting practices, and I would be be extremely doubtful that they let this information be known.

Even if the price on the invoice is the same, its a bit of a moot point with all this talk of discounts, rebates, "free" kegs, "free" glasses that I see in other threads.

Jumboman wrote: »

I wonder how O'Reilly's and MacTurcaills in Dublin city centre are able to sell pints for 3.30 and 3.60 ?

They might be getting their kegs cheaper, like how the Aviva stadium planned on importing guinness kegs from the UK as it was cheaper.

Diageo has agreed to slash the price of Guinness to the company which runs the bars in Dublin’s new Aviva Stadium at Lansdowne Road, after the company threatened to import supplies from Britain.

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.

That is from the sunday business post, so there is one definite case of them charging different prices in Ireland for kegs. I would be very surprised if others did not get deals. e.g. places like the olympia have a very poor selection of beers, I always presumed they got it discounted as a way of advertising or forcing people to try their product.

Jumboman

rubadub wrote: »

They might be getting their kegs cheaper, like how the Aviva stadium planned on importing guinness kegs from the UK as it was cheaper.

Well if they can do it the rest of the pubs should do it.

Geuze

It seems 3% was the growth in absolute op profits, rather than the margin.

Frynge

The prices are
Guinness €142.36
Budweiser €147.34
Carlsberg €147.75
Heineken €149.40
Coor's (30l keg) €89.65
Bulmer's €144.63


The prices for these products are the same across the board (in my experience). But these prices are never paid. First there is a settlement discount of 2-2.5%. There is also the quantity based rebate at the end of the year and as rubadub said there is free glass ware and other equipment provided to give additional discount. On that note Guinness glasses are the only branded glass that we have to pay for.

Geuze

I am assuming that these prices exclude VAT paid by the pub to the brewer.

I am going to knock a cumulative 2% settlement discount + 14% annual rebate off these prices.

I will use keg = 87 pints, to allow 1 pint for wastage (??)

(142.36)(0.84) = 119.58 / 87 = 1.37 per pint effective cost.

Now my local charges 4.00 per pint of Guinness.

Taking 23% VAT off that means 3.25.

Less the 1.37 effective cost per pint means 1.88 gross margin.

Geuze

Summary of 4.00 retail pint of 4.3% Guinness based on above data

Brewer charges 1.37 effective cost per pint, incl 46.7 excise, based on 87 pints to the keg

Pub adds 1.88 gross margin, and 23% VAT is 75 cent


Brewer = 90.3 cent
Excise = 46.7
Pub = 188
VAT = 75 cent

Does that sound correct?

Frynge

Not quite correct since the 14% rebate only goes for the busiest pubs in the country, probably less than 100. Also wastage levels up and down the country are going to go up since diageo removed the crediting of line cleaning wastage.

There is a saying that a barman will get 86 pints from a keg, a good barman will get 88 and a great barman will get 90.

Geuze

Ok, to get the 14% rebate you need to buy 150,000, which is maybe 1,000 kegs or 20 per week?

I will re-do the figures based on 6% rebate and 86 pints per keg.

Rabies

Is Diagio the only or main beer group in Ireland ? Any other competition?

BeerNut

Rabies wrote: »

Is Diagio the only or main beer group in Ireland ? Any other competition?

Heineken is the other big one.

Mick Murdock

Really interesting thread. It does make me wonder how many of my local pubs are still in business - I wouldn't have thought pub food was massively profitable, certainly not enough to sustain such terrible margins on alcohol. Also, why the hell anybody buy/lease a pub in this day and age?

There is definitely a fine line between making a profit and trying to attract customers in the door. I think a lot of publicans lose sight of this and chase the higher profit margin when they really should look for profits through quantity.

What do I know? :rolleyes:

Rabies

Mick Murdock wrote: »

Really interesting thread. It does make me wonder how many of my local pubs are still in business - I wouldn't have thought pub food was massively profitable, certainly not enough to sustain such terrible margins on alcohol. Also, why the hell anybody buy/lease a pub in this day and age?

There is definitely a fine line between making a profit and trying to attract customers in the door. I think a lot of publicans lose sight of this and chase the higher profit margin when they really should look for profits through quantity.

What do I know? :rolleyes:

Living in a country where a range of "substantial meals" is mandatory while a licensed premise is open, makes most small bars owners happy if they can break even on food.

I've worked for people that want busy venues and are willing to sacrifice profit on quiet days if they can appear busy. Result is a steady trade. Happy customers. But high turn over of staff as we pay lower. This bar is tied to a brewery, gets massive rebates. Push out a crazy about of beer and our basic spirits were tied to another alcohol company, more rebates or quarterly bonus stock with them. Does mean our first pours and beers were restricted.

Now working for one of richest business people in her field in New Zealand, but she is all about profit. We don't turn over as much as we could, she want to see profit. We have expensive drinks and an ok trade. I could easily pull another $5k a week in this place, and would only take a slight hit on the end of week $% that she wants.
Staff get paid a bit better here though. This place does not get rebates, no brewery contract. Fully independent. Can stock what I want, but means my keg price for a 50L is anything from $180-$500, not including delivery charges.
We get no bonus stock here

RandolphEsq

Someone mentioned spirits earlier in the thread. Think it is €22 per bottle of Smirnoff wholesale in a box of 12 (from what I recall from seeing it). Once that is purchased all that is required is a glass, ice and a slice of lemon. This is sold at 4-4.50 for a shot and there's probably 20-22 shots in a bottle (spillage, extra- poured etc.). The mark-up is astounding. At least with a keg of beer it needs to be kept in a giant cold-room, the gas needs to be maintained along with the lines. A shot of a spirit is disproportionately expensive compared to a pint.

Sofiztikated

RandolphEsq wrote: »

Someone mentioned spirits earlier in the thread. Think it is €22 per bottle of Smirnoff wholesale in a box of 12 (from what I recall from seeing it). Once that is purchased all that is required is a glass, ice and a slice of lemon. This is sold at 4-4.50 for a shot and there's probably 20-22 shots in a bottle (spillage, extra- poured etc.). The mark-up is astounding. At least with a keg of beer it needs to be kept in a giant cold-room, the gas needs to be maintained along with the lines. A shot of a spirit is disproportionately expensive compared to a pint.

19.7 actually.

RandolphEsq

Sofiztikated wrote: »

19.7 actually.

19.7? That's impossibly exact.

Sofiztikated

RandolphEsq wrote: »

19.7? That's impossibly exact.

700ml bottle, 35.5ml in a measure.

Jumboman

RandolphEsq wrote: »

Someone mentioned spirits earlier in the thread. Think it is €22 per bottle of Smirnoff wholesale in a box of 12 (from what I recall from seeing it). Once that is purchased all that is required is a glass, ice and a slice of lemon. This is sold at 4-4.50 for a shot and there's probably 20-22 shots in a bottle (spillage, extra- poured etc.). The mark-up is astounding. At least with a keg of beer it needs to be kept in a giant cold-room, the gas needs to be maintained along with the lines. A shot of a spirit is disproportionately expensive compared to a pint.

I've seen 1 little bottles of Smirnoff for 20 euro in Tesco also if you go to england you can get two bottles for £20 I'd imagine you can get the same deal up north.

Sofiztikated

Jumboman wrote: »

I've seen 1 little bottles of Smirnoff for 20 euro in Tesco also if you go to england you can get two bottles for £20 I'd imagine you can get the same deal up north.

Then you're liable for import duties.

BaZmO*

Sofiztikated wrote: »

Then you're liable for import duties.

From the UK? Don't think so

-edit Actually, I think you would have to pay duty if the items were bought for resale.

Jumboman

Sofiztikated wrote: »

Then you're liable for import duties.

Do UK bottles of Smirnoff look any different ? I dont see how they would be caught if they bought a few bottles back from the north.

P_1

Jumboman wrote: »

Do UK bottles of Smirnoff look any different ? I dont see how they would be caught if they bought a few bottles back from the north.

I would have thought the Revenue send out inspectors to check the various stamps seals and watermarks.

Rabies

On spirits since its come up, we pay $28-38 a bottle for the house range.
Bottle size will vary, 700ml, 750ml and 1000ml.
Standard pour is 30ml (double) is $8.50-$9 in most bars.
Very expensive here. An Irish standard pour is 35.5ml (single) and its roughly the same price that we pay here.
All mixers are free over here if a spirit is purchased, that includes juice.

Frynge

RandolphEsq wrote: »

Someone mentioned spirits earlier in the thread. Think it is €22 per bottle of Smirnoff wholesale in a box of 12 (from what I recall from seeing it). Once that is purchased all that is required is a glass, ice and a slice of lemon. This is sold at 4-4.50 for a shot and there's probably 20-22 shots in a bottle (spillage, extra- poured etc.). The mark-up is astounding. At least with a keg of beer it needs to be kept in a giant cold-room, the gas needs to be maintained along with the lines. A shot of a spirit is disproportionately expensive compared to a pint.

When you get away from kegs, pubs start to pay wildly different prices for the rest of their stock. The vodka example you gave is the best. I presumed you ment litre bottle at that price and thought it was expensive. We buy in litre bottles of Smirnoff for approx €15.66 or €19.30 with VAT. but there is places buying bottles for far more than that.

We would be dealing with over 12 different suppliers for most of our stock. The main reason we buy from any of the suppliers is price ( on spirits most suppliers change their prices monthly), after that there might be other reasons such as to make up a target to receive a rebate or because we are stuck and need a certain product ASAP.

If we run low on kegs because of a particular busy night/weekend we might get kegs from a local wholesaler who would deliver it straight away, but they charge a lot more per keg €10-20 extra, also some wholesalers require cash on delivery for any keg sales. Buying in this way will affect the margins on kegs.

Frynge

P_1 wrote: »

I would have thought the Revenue send out inspectors to check the various stamps seals and watermarks.

They do is the simple answer, but some of our suppliers buy in direct from uk market and pay the duty here. There is a stamp/cert type thing on the bottles saying for uk market only but this is covered up once duty is paid in Ireland.

Rabies

If we can (and usually do) we'll eliminate delivery charge when possible. Suppliers expect it and work it in to their cost.


How does the price that I have estimated equate to in Ireland? About right?


edit:
I should clarify. We usually get rid of delivery charge from the wholesalers or the big breweries. Not much we can do about the small craft guys, they can't absorb it.

Big Nasty

GP% on draught beer can be anything from 50-80% but in and around 60% would be the norm. As already mentioned pubs have massive overheads and with trade as bad as it is these days find it difficult to break even charging €5 per pint. A keg of beer is cq. €145 ex VAT, that's €1.64 per pint yet breweries can sell canned / bottled products to the multiples cheap enough for them to retail at €1 per unit while at least breaking even, if not making a profit.

If we want cheaper beer in pubs we need to start looking at the breweries and not the pubs as they can clearly afford to sell to publicans for at an absolute minimum €0.64 less per unit than they already do. That's €56.32 less per keg bringing the average keg price in and around €90 a pop. Pubs maintaining a 60%GP on a pint can now sell a €5 pint for €3 whilst maintaining the same profit margins.

BeerNut

MCMLXXV wrote: »

we need to start looking at the breweries and not the pubs

But we don't buy our beer from the breweries. We have a choice in what we pay at retail, but no influence over the wholesale prices.

Perhaps the pubs need to look at the breweries.

Sky King

In the North lots of pubs buy kegs from the UK because it's cheaper - even through a wholesaler.

BaZmO*

BeerNut wrote: »

But we don't buy our beer from the breweries. We have a choice in what we pay at retail, but no influence over the wholesale prices.

Perhaps the pubs need to look at the breweries.

Exactly. Blaming the customer for prices is just stupid. Maybe if all the pubs hadn't of cosy'd up with the big breweries during the good times they wouldn't be in such a mess.

Big Nasty

BeerNut wrote: »

But we don't buy our beer from the breweries. We have a choice in what we pay at retail, but no influence over the wholesale prices.

Perhaps the pubs need to look at the breweries.

Publicans have little / no influence over what the breweries are charging either.

The point is that the breweries are charging the publican at least 64% more, actually it's almost double if you de-VAT the can / bottle, per unit than they are charging the multiples.

In turn we are effectively boycotting pubs because of the prices publicans have to charge to break even.

BeerNut

MCMLXXV wrote: »

In turn we are effectively boycotting pubs because of the prices publicans have to charge to break even.

Well I'm not. I go to the pubs where the beer is good value and spend my money there.

MCMLXXV wrote:

we need to start looking at the breweries

So by "looking at" do you just mean "blaming"?

Big Nasty

BeerNut wrote: »

Well I'm not. I go to the pubs where the beer is good value and spend my money there.

So do I, but like the vast majority of people I can no longer afford to do so as regularly as I used to.

BeerNut wrote: »

So by "looking at" do you just mean "blaming"?

Yes, yes I do!

If the breweries were charging publicans the same price they do the multiples they would be in a position to sell pints at cq. €3 and still make the same profit. Seems fair to me.