‘Dialling up’ pressure on pubs
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A memo to Ken Murphy, the boss of Tesco: “How many more pubs would you like to see close?”
It’s a chilling statistic: 50 pubs a month are shutting. Not on a temporary basis, but forever. Many others are opening for just a few hours a week, with publicans laying off staff they can’t afford to pay. Some pubs, like hedgehogs, are hibernating for the winter.
In the short term, it can only get worse if the giant supermarkets have their way. Ken Murphy is the chief executive of Britain’s biggest grocery chain and last month he said he was bolstering its alcohol offers as he “expected more families to celebrate Christmas at home, rather than going to pubs or restaurants.”
He added: “People want to celebrate in an affordable way. We’re really dialling up that proposition in terms of our alcohol offers.”
Bolstering and dialling up are weasel words. What Mr Murphy means is that the price of beer in his stores will be slashed even further. He doesn’t have to wait for Christmas. As the football World Cup approaches, we know supermarkets will be knee deep in boxes of Euro fizz with prices similar to those for bottled water.
If I go to my local pub, I will pay £4.50 for a pint. If I cross the road to Tesco, there will be beers on “special offer” at around £1. And Ken Murphy is planning to cut prices even lower.
Governments of all colours and stripes have failed to tackle the way in which the giant grocers distort the market by selling cheap booze. “It’s all down to the free play of the market,” we are told.
But the market is not a level playing field. Where beer is concerned, the grocers sail along the placid waters of the Norfolk Broads while publicans have to paddle up Niagara Falls on a leaky raft.
The key question is: how is it that supermarkets sell beer so cheaply? The answer is two-fold.
For a start, the grocers demand enormous discounts from their suppliers. I have been told on very good authority that Molson Coors makes one penny profit on each can or bottle of Carling lager it sells to supermarkets.
That is the economics of the madhouse – save for the fact that if you sell several million cans and bottles you can still make a tidy income. Small brewers can’t work to such low margins and don’t deal with supermarkets.
It’s instructive to note that since Camden Town and Beavertown breweries were taken over by AB InBev and Heineken respectively, their beers are now widely available in supermarkets.
The second answer to the conundrum of cheap supermarket prices is one that Tim Martin, the chairman of Wetherspoon, has railed against for years – and that is the VAT fiddle.
The giant grocers claim back VAT on beer they buy at cost or below cost. Publicans can’t do that as they pay top dollar for their beer. On top of that they are hit by sky-high business rates and rents while energy costs have risen three-fold over the past year.
When I attacked Tesco’s price-cutting plan on social media, a number of people pointed out that as a result of the cost-of-living crisis many people can’t afford pub prices and fall into the cold embrace of the big grocers.
I accept the criticism, but the answer is not to give the giant grocers carte blanche to increase prices but to redouble our efforts to support pubs. In 2016 research by CAMRA and Professor Robin Dunbar at Oxford University found many people – especially older ones – use pubs for more than just drinking. They go to meet or make friends and to use all the facilities pubs offer for socialising.
To save pubs as vital community hubs we need government action to cut VAT, business rates and energy costs for pubs and to take up CAMRA’s call for a major reduction in the excise duty paid on draught beer.
But I realise as I type the words “government action” that that could prove a tad difficult at the present time.