Curmudgeon's "Opening Times" Column - August 1999
* Closed and Boarded in Calais *
Last month, I visited France, and saw for myself the low beer prices in hypermarkets that are such an encouragement to smuggling. Certainly 33 cl cans of Kronenbourg at just over 20p were pretty startling - and while that is recognised as a bog-standard beer in France, it is about 5% ABV and in Britain is marketed as a premium lager selling for upwards of £2 a pint in pubs - six times as much. On a more interesting note, good quality German and Czech beers were on sale for less than 50p for a 33 cl bottle - half the off-licence price and a quarter of that in the pub. This is only possible because French beer duty is about 30p a pint less than in Britain. Surely a move to equalise duty would give a major shot in the arm to this country's hard-pressed pub trade.
But it isn't quite as simple as that. For a start, look at the situation in France. French bar prices are actually higher than those in Britain, despite the lower duty. Draught or bottled beer typically costs about 20% more than it would here. Of course France has a very different drinking culture, but a large number of bars seem to make a decent living, and the streets of Calais and St Malo are not exactly lined by closed and boarded drinking establishments.
And what would happen in Britain if duty came down to the French level? Currently, premium lager - which makes up most of the duty-paid imports - sells for roughly £2 a pint in pubs, and £1 a pint at the off-licence. If the duty was cut by 30p a pint, the price would come down by 15% in the pub, but by 30% at the off-licence. £2 to £1.70 isn't that much of a difference, but £1 to 70p certainly is. It would help the domestic take-home trade, but it would actually tip the balance further away from pubs. Anyone who thinks that a duty cut would be a panacea for the pub trade is deluding himself. And, despite the protestations of pub operators, who really believes that they would pass on the full benefit of a cut to drinkers on a permanent basis?
Of course duty should be equalised, and it will slowly happen. Beer duty in Britain was frozen in the last budget, and it will be difficult politically to raise it again. But the reason why it should be equalised is to eliminate the incentive for organised crime, not to help the licensed trade, as it clearly wouldn't do that. The best way to help pubs would be to return to the old policy of allowing each person to import a maximum of 50 litres of beer, with anything more having to have duty paid on it. That's more than enough for personal consumption, but low enough to make smuggling no longer worthwhile. Unfortunately, because of the Single Market, that is politically impossible. Maybe the best thing we could do for pubs is to leave the European Union!
* Holts Come to Dover? *
Brewers and pub operators in the south-east, who have been hit hardest by duty-paid imports, also do themselves no favours by their continued policy of high prices. If pubs in Kent and London were charging Hydes or Robinsons prices, let alone Holts, rather than £2 plus for ordinary bitter, they could compete much more effectively. They claim that high prices are due to higher rates and wages, but that doesn't seem to apply to much else on sale in the south-east. Prices at petrol stations and supermarkets are just the same as around here, and so is the price of pub food, where all the same factors presumably apply. The pub operators have got themselves locked into a vicious circle of higher prices and lower consumption, and to a large extent have only themselves to blame if their customers are staying at home drinking 20p cans of Kronenbourg.