Sunday, December 28, 2008

Getting the price right

I’ve never been wholly convinced by the view that supermarket alcohol prices are killing pubs. Yes, off-trade beer is cheaper, and has been for thirty years. But the experiences of going to the pub and socialising with your friends, compared with sitting at home and drinking a few cans of Stella while watching telly, are not really interchangeable.

However, this is not to say there’s nothing in it, and I can’t help thinking that over the years the pub trade has shot itself in the foot on the pricing issue. There has been an assumption that, year-on-year, prices can be increased by a bit above inflation, and the customers will put up with it. But every other sector has been subject to severe price competition, so why should pubs be exempt? This point has been underlined by the rise of Wetherspoon’s, who aren’t as cheap as the off-trade, but in general are much cheaper than the local pub competition. A Wetherspoon’s pub may be devoid of character, but you need a strong incentive to go somewhere else that is charging 50 pence a pint more. Arguably Wetherspoon’s are doing to the pub trade what ASDA and Morrisons have done to food retailing.

Surely the generality of the pub trade should at least give some impression that they are doing something about prices – maybe, for example, offering one draught beer a week at 50p a pint off. You don’t need to discount everything you sell, or even very much of it, to give an impression of being price competitive, a lesson the supermarkets have learned very well. The current recession is only going to underline this point.