Curmudgeon's "Opening Times" Column - August 2008

* Diluting the Brand *

Large brewers buying respected beer brands will inevitably end up compromising quality

In the past, breweries would often be taken over for their tied estates, and the acquiring company, despite making assurances to the contrary, wouldn’t be too bothered about the beer brands. When did you last have a pint of Matthew Brown? However we have recently seen two substantial breweries being taken over that do not have tied pubs, so the only attraction is the brands themselves. Scottish & Newcastle bought Caledonian, while Marston’s acquired Refresh who produce Wychwood and Brakspear’s beers.

There is no inherent reason why a large company cannot be a worthy steward of a beer brand - after all, many of Scotland’s most famous malt whisky distilleries have been owned by multinationals for decades. But the past track record of large brewers does not inspire confidence. How long will it be before cost-saving pressures lead to the closure of the original breweries and the transfer of production to the parent plant, with the inevitable erosion of distinctive character? Just look at the fate of Ruddles, once one of the most respected beer brands in the country, but now existing only in a sad half-life being brewed by Greene King at Bury St Edmunds after having passed through the hands of Grand Metropolitan, Grolsch and Morland.

If the long-term aim is to dilute the heritage they have acquired, which will inevitably cause sales to dwindle away, you have to wonder what is the point of the exercise in the first place, except as a short-term smash and grab raid with the aim of gaining quick profits.

* Raising the Bar *

Minimum alcohol pricing may not be the godsend for the pub trade it appears

The government’s decision to raise the level of alcohol duty well above the rate of inflation has been widely criticised as potentially making alcohol problems in society worse, by widening the differential between the on and off trade and encouraging drinking at home rather than in the relatively controlled environment of pubs and clubs. One way of getting round this would be to impose a minimum price per unit of alcohol that would apply to all outlets, something that is now seriously being considered in Scotland. This would prevent below cost selling and the aggressive discounting of low-end brands while leaving pubs largely unscathed, and on the face of it could help to redress the balance.

If it was set at a level of say 30 or 35p per unit, it would only affect cheap brands and deep discounting, and wouldn’t have any impact on mainstream off-trade products. However, the Scots are talking of setting it at up to 50p per unit, which would make a standard bottle of whisky £14 and a bottle of 12% ABV wine £4.50. That would leave a large hole in many household budgets and would be politically extremely unpopular. If a similar policy did not apply in England it would also give rise to a large amount of cross-border shopping, with discount booze warehouses springing up at Berwick and Carlisle. This would distort the market and could even make matters worse by encouraging bulk buying and large-scale smuggling for resale.

If the proceeds of the higher prices in Scotland went entirely into the pockets of drinks producers, it would ironically give the drinks industry a large financial injection. The competition authorities work strenuously to expose price-fixing cartels, yet in this case price-fixing at the expense of the consumer would be legitimised.

On the face of it, minimum pricing might seem an appealing option for the on-trade, but in reality it would be likely to lead to all kinds of unforeseen and undesirable consequences and would be another example of the neo-prohibitionists seeking to undermine the drinks trade by a “divide and rule” approach.

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