Minimum pricing for alcahol, good for the trade or not?

Fair play to the Scottish parliament. Finally a proposal to introduce a minimum unit price for alcahol. Once again Scotland seems to be prepared to put common sense before political expediency and propose a sane idea!

Accepting as a starting point that binge drinking IS a genuine problem in this country, and both medical opinion and personal experience would suggest that it is, is the mooted idea of a minimum selling price per unit of alcohol a good idea?

Assuming the price set to be 45p per unit, which what the Scotish Parliament has specified, who would it hurt? Well the supermarkets primarily. This price would fix the minimum price for a pint of beer at between £1 and £1.50, a 125ml glass of wine at 75p and a shot of spirit around a pound. To a pub person not excessive. Even in Wetherspoons. Now look at it from a supermarkets point of view: a case of Stella £26, a bottle of wine £3.50 and a bottle of spirits £14; bang go the Buy One Get One Free deals (not to mention the loss leading that they never do anyway…). That’s where it hurts.

But how does this affect the average consumer and the pub? The average ‘social drinker’ will see a minimal increase in their exependiture over the course of a week, a couple of pounds maybe. The average pub will see little or no effect – how many of us can sell beer at that sort of price and still make a profit? In fact the effect may well be positive as the price differential between the pub and the supermarket would drop, possibly enough that the added value of the pub environment will win out over the price of drinking at home – if only we could have a fag there as well. It would also cut down on the ‘pre-loading’, which is no bad thing.

The only people really hit by this potential measure are the binge drinkers – Special Brew £3 a can, British Sherry £6 a bottle….. Which is kind of the point of it all.

So where is the downside – at least as far as the pub business goes?

The Westminster argument for not adopting the measure is that it would ‘hurt the social drinkers’ as much as the binge drinker. This is clearly facile as previously discussed. A more reasonable explanation for the government attitude is that they cannot tax it. No extra income to the treasury. Obviously this is not acceptable in Whitehall, so instead they continue with the escalator of tax hikes, which boost their coffers whilst hurting the ‘social drinker’ as much, if not more than, the binge drinker. Where a minimum price per unit would only really effect the bottom end of the market a tax increase hurts it all, and more so at the higher end.

Accepting the initial premise that ‘binge drinking is bad’ I can see no better alternative than a minimum pricing policy to discourage it. It is the greed and short term thinking of the government that is preventing it in England – not the great public outcry. We all know that the country is in a dreadful economic state, but just for once can’t we put the health of the nation before the health of the treasury?

Budget Reaction

Feels more like a political blog right now, than an industry blog. That is largely because there is so little happening within the industry right now. The hatches are battened down and as long as England keep winning and the good weather hold things don't seem to be getting significantly worse at the moment, which makes a nice change.

As to the 'Emergency Budget' - in short - not as bad as I expected.

I don't think anybody really believed that VAT was going to stay at 17.5%, it was either that or income tax that had to produce the big savings, and at least VAT is across the board. Sure it's going to hurt in January when we all have to put 10p on the pint, but it will not be the pub industry alone, everyone will be doing it and it'll hurt much more in other areas, after all our punters are used to drinks costs rising on a regular basis and will soon get over it. I don't think this can be said for many other industries.

The good news was that duty was left alone - I almost fell out of my chair at that one. It's been the whipping boy of the treasury for so long that it was expected rather than feared. And better still, the insane 'cider tax' has been withdrawn, so all you westcountry and kentish men can breathe a sigh of relief.

Other good news was no increase in NI, and a rise in the threshold. This won't make a huge difference but at least the cost of staffing your business has not been bumped again. The 'jobs tax', as it got christened, would have been disastrous - putting up our major cost disproportionately.

In brief, although the general outlook for the next few years remains gloomy, it has got no gloomier for the pub industry than it has for the rest of the economy, which is a pleasant surprise. Everybody needs to tighten their belts and disposable income will drop all around, but people will still find a couple of quid here and there for a drink. It is, after all, the British way.

As an aside: for those of you not as adept with figures who want to know what the increase in VAT will mean to them in real terms, there is a free Gross Profit Calculator located on our main web site located here. Just go to the 'Free Stuff' tab and download it. I will shortly be updating in to display the GP and required pricing at both 17.5% and 20% VAT so that you can see the difference in real money.

The General Election and all that, Part 2....

Well, now that the clouds have parted and we can see at least a little of what is to come, what does this change in government mean to us?

On the plus side, we've got rid on Gordon and his NI rise. This has to be a plus.

Other than that? Nobody seems too sure at the moment what the Cleggeroon will do. Lots of pro-business talking, and lots of warnings of tough times to come. I'm still expecting huge increases in duty on alcohol - it's one of the few soft targets that they have left top aim at.

That is all the great crystal ball is saying for now. Look out for a budget of some description in the very near future, which should give us more info.

Until then it's continue to batten down the hatches as time are going to be tough. Whatever there is to come, you can bet that the prices that you have to charge are going to rise, and that the disposable income in people's pockets is going to shrink. Not a good combination in any climate, but with the current bleak outlook this is not going to be fun.

The General Election and all that.....

So, we stand on the brink of a new era, but what will it be.

Until yesterday a Lib/Con government of some sort seemed inevitable, but all of a sudden Labour drop a bombshell and it's all change. Brown admits that he needs to go (not that he intends to for months) and suddenly the LibDems are falling over themselves to talk to Labour. Am I the only one who smells Mandleson in this turn of events?

I'm still deeply sceptical that a Lib/Lab pact can work, they just don't appear to have enough votes. SNP will never support Labour for starters and without them they still can't get a majority, so why all the messing about? Seems to me that the Liberals are overplaying their hand, trying to squeeze the Tories for even more concessions than they've already been offered. This can only cause more chaos, more market uncertainty and overall damage the economy.

But what does it mean for our industry?

Don't think that we need a crystal ball here - pubs will still be the whipping boys of Westminster. Whoever forms the next government needs to raise billions of pounds somehow, so the old favorites: beer, cigarettes and petrol, will be clobbered again regardless of who is in No 10. The best that we can hope for really is that whatever the colour mix of the new regime is, Gordon Brown's NI rise will not go ahead. This would be a disaster for most independant publicans. We already have wages as one of the top 2 costs of running a business - the only thing that comes close is rent. Another rise in NI will put the actual cost of staff up to around £6.65 per hour at minimum wage! That is something we can well do without, both as an industry and a country, when you consider how many people the industry actually employs taxing pubs into nonexistence seems, at best, a shortsighted idea.

We may not be seen as laying golden eggs, but the long term consequences of destroying the pub industry would be akin to killing the golden goose.

Enough ranting for now. Let's see how it turns out in the next few days.

My Crystal Ball still shows a Lib/Con agreement of some kind, but a tiny part of me wants the Tories to just sit back and say "off you go then, form a 'rainbow alliance' and see how long it lasts". Unfortunately, humorous as that would be, I think the consequences for the economy would be too awful to contemplate.

Intro.

Great, a new Blog.
This is where I can rant and rave about all the things that annoy me (and occasionally some that don't) about the state of the Pub Industry.
After nearly 25 years working in this industry I have many 'views' that I feel need to be aired. I'd like to stress now that these are purely my personal opinions and do not represent the views or policies of anybody but me. Please feel free to throw in your 2 pennies worth as often as you like, discussion is a good thing!