24.9.09

Guinness 250

As Guinness marks its 250th anniversary, lets look at the price of beer.

Actually, let's also look at the fate of pubs. Because 250 years ago Arthur Guinness signed a 9,000 year lease on the St James' Brewery in Dublin.

That gave him freedom to pursue his business, something that's denied to pub tenants today.

PRICE OF A PINT

According to website SaveAFewBob, the price of a pint in 1947, was the equivalent of 4 euro cents. Today that pint will cost you somewhere between 4.50 and 5 euro.

Well, the Irish Central Statistics Office seems correct in its view that Ireland is the second most expensive country for consumers in Europe.

However, as a percentage of weekly pre-tax pay, the price of a pint has been relatively stable since 1970.

Yes, you earn about 140 pints of Guinness a week.

WHY DO I EARN SO LITTLE BEER?

One reason is the huge investment bank-backed PubCos which are running the business into the ground.

These companies bought up old banks over the past two decades, giving them town centre properties from which they could maximise revenues. This is how the old pub gave way to the modern beer hall.

It would have been a very profitable business if the PubCos had not been greedy, taking huge loans to buy ever more properties. Now, struggling to pay their debts, they're driving pub landlords into the ground.

The UK, for example, faces a wave of pub closures as major investors call on Punch Taverns to sell its pubs and settle its debts.

"END THE TIE"

Seven pubs close every day in the UK, or 2,300 in the past year. Of 600,000 people working in pubs, 24,000 have lost their jobs in the past year. And the reason for this, according to the tenants themselves, is the tie.

PubCos enforce high beer prices. They also charge penal rents, extracting more profit from the pubs by forcing tenants to pay extortionate rents.

The Federation of Small Business called for an end to the tie, saying 67% of managers of pubs that turn over more than £500,000 a year earn less than £15,000. That’s not even the minimum wage.

Stupidly, the UK government three decades ago forced small brewers to choose between owning tied pubs or selling them beer. Ministers decided that for brewers to sell their own beer through their own pubs was anticompetitive.

"DOWNRIGHT BULLYING"

The legislation led to the collapse of many small brewers and the buying up of pubs by PubCos. Cheap-to-make lager replaced handcrafted ale at, you guessed it, the same price.

UK MPs on the Business and Enterprise Select Committee this May accused PubCos of "downright bullying".

Sadly, this is largely the fault of civil servants and their poodle MPs. If the UK bureaucracy had intended to hand the industry on a plate to international mega-brewers and investment banker property magnates, they couldn't have done a better job.

Back in 1931 Lady Astor said in the House of Commons, speaking of the political influence of the wealthy brewers: "You might as well call it the beerage as the peerage".

The PubCos have indulged in price gouging and extortion on a level the brewers never did. At least it's not the fault of Arthur Guinness.

Happy Guinness Day!


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