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Pubs drinking in the last chance saloon

Irish Independent
Eddie Lennon, September 24th, 2004

We are changing our drinking habits now, opting for home rather than the pub

LAST week the national publicans’ body, the Vintners Federation of Ireland, described criticism of the price of drink as “totally unjustified”.

That view will certainly be a source of bemusement, if not amusement, to the many pub-goers in Ireland. But why is the price of the pint so extraordinarily high?

In March 2002, Diageo raised the price per pint of its draught products (Carlsberg, Budweiser, Harp, Smithwicks, Kilkenny and Cashel’s cider) by 4c. It did the same in March of last year, and raised the price again by 6c last June.

According to a spokesperson for Diageo, “most pubs translated the June price rise into an increase of between 10c and 15c”.

The Irish Brewers Association, which is part of IBEC and represents Ireland’s four major brewers, recently gave a breakdown of how the price of a pint is shared between the three main players: the brewer, the publican and the Exchequer.

The average price of a pint at the end of 2003 was €3.42. Of that, the brewers get 85c, the Exchequer gets €1.07 (in excise and VAT) and the publican gets €1.50, according to the Association, quoting figures from the Central Statistics Office.

In 1997, the publican got 39pc of the price of a pint; today they get 43pc.

Vintners Federation of Ireland spokesman David Hickey says that, while anti-competitive regulations prevent publicans from increasing prices en masse, publicans have hiked their prices in tandem with increases in the Budget and by the breweries “to protect our margins; otherwise we lose out”.

Paddy Jordan, director of the Irish Brewers Association, says publicans put up their prices more often than brewers do. This is largely the reason why the publicans’ slice of the action has increased by 5pc in the past seven years. If the Exchequer’s take is excluded, it emerges that the publican gets almost two-thirds (64pc) of the non-tax price of a pint, with the brewer getting just 36pc.

Vintners Federation chief executive Tadg O’Sullivan says that, with a raft of heavy and spiralling overheads including staff costs, tax, insurance and rates, publicans’ net profit is just 0.5pc.

However, this is contradicted by one leading publican, who asked not to be named. He says publicans’ net profit (after all liabilities) varies from nil to 10pc, depending on overdraft repayments, turnover and general cost control.

Dermott Jewell, chief executive of the Consumers Association of Ireland, believes publicans are going too far by invariably meeting price increases from the brewers with their own price hikes. “It’s an unwritten law.”

“If you look at the prices they have been charging for soft drinks and quarter bottles of wine, there is more than enough room for them to absorb at least some of the brewers’ price increases.”

Mr Jewell says publicans are now paying the price for their regular price increase. “Even before the smoking ban, they had seen a big loss of custom because customers could not afford the prices. People have changed their habits; they drink more wine and beer at home.”

Director of Consumer Affairs, Carmel Foley says: “The average pub customer gazes in disbelief at the prices achieved at auction for pubs, which seem to suggest that the returns publicans are getting are greater than other retailers.”

“Publicans are a privileged group: they hold a licence from the State and there are no more new licences given.” She believes pubs should be deregulated, with safeguards against the ongoing problem of alcohol abuse.

According to Diarmuid MacShane of consumer awareness website www.valueireland.com: “The high charges we’re suffering in pubs is definitely shameful profiteering by publicans. The treatment they mete out to their customers (via badly maintained toilets and service and rudeness from staff) stinks of crass disregard for their customers.

We asked the Licensed Vintners Association, which represents publicans in Dublin and Bray, to respond. They declined to comment.

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