Saturday, 20 November 2021

Breaking the glass ceiling

The price of premium bottled ales doesn't seem to have changed in years. Like some fixed feudal price it's been around £2 a bottle, or £1.50 when you look for special offers or multibuys, for ages. 


I can't see this lasting though. Brewery suppliers are  not bound by such feudal constraints. At the moment all of them seem to be putting their prices up, many by double digit percentages and in the case of CO2 by 300%. There's no way breweries will be able to absorb these costs. Supermarkets have a lot of power when it comes to beating down prices but even they aren't going to be able to make brewers sell beer at below cost. Not in the long term anyway. 

The cost pressures will also apply to craft cans, though at the moment they seem to be going down in price. I'm not much of  a can buyer but if I remember rightly it's not so long ago they were generally £3 a pop for 330ml cans, whereas £2.50 for 440ml seems common now. 


And in more bad news for small brewers about half the craft cans in my local supermarket were made by multinationals.

6 comments:

  1. You are correct, I distinctly remember about 15 years ago getting Coniston Bluebird for £1.50 in Asda and thinking I’d got a good deal.

    This of course reflects the buying power of the supermarkets vis-a-vis even the biggest brewers. We remember the debacle several years ago when Carlsberg tried to put its prices up and Tesco responded by delisting it.

    It is well known that the supermarket does not offer good margins, but it does offer large volumes. It’s the volume trade that keeps Marston’s and their many breweries represented on the supermarket shelves.

    I think the supermarkets *can* force brewers to sell below cost in the medium term, because the brewers need to shift that volume, even if they lose money on it. The alternative is not shifting it, and losing even more money.

    This is what has worked for Wetherspoons for many years.

    See also the price of milk, which has been held so low for so long that dairy farmers went out of business.

    I think that brewers will try to raise their prices to the on-trade to compensate. It seems likely that the customers of Brodog’s bars have already been subsidising the supermarkets for a long time.

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    1. We'll see in the not too distant future. If supermarkets don't start paying more the range might also diminish as not every brewery will be able to put up with that.

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  2. Ed- interesting commentary. The price points are the territory of the retailer and quite a lot of them are marginal in terms of profit. But yes Brewers need to demand better pricing- and actually it would be better for long term brand building if the retail prices reflected that

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    1. Yes, when I see strong bottled beers going for £1.50 I think there can't be much margin on that. They must be making more margin on the cans but already that is diminishing.

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  3. Yes, this particular price point does seem to be very sticky, although I do remember when it was £5 and then £5.50 for 4. I think a significant problem is that there's not actually a lot of brand loyalty within the sector, so many punters just look at which beers are within the offer and disregard those that are outside it at a higher price.

    This is why brewers like Westerham have shifted to cans, but it's essential that they can maintain the perception that they are in a different sector. The direct canned equivalents of PBAs tend to be £5 or £5.50 for 4.

    There's a similar situation with 3 for £5 for 660ml bottles of lager.

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    1. Yes, I remember being annoyed because Safeways having 4 for £5 but when it became Morrisons having 4 for £6. But that would be over 15 years ago!

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