The slump in UK beer sales

The slump in UK beer sales<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /> ‘The volume of beer sold through pubs is now at the lowest level since the Great Depression of the 1930s. Pub beer sales are down 49 per cent from their peak in 1979. That’s a loss of more than 5 billion pints – meaning today’s pubs are selling 14 million fewer pints per day.’ (source BBPA) These are tough times for Britain’s 58,000 pubs. This BBC news online reportflags up a report from the British Beer and Pub Association which finds that beer sales in pubs have fallen sharply since the peak in 1979. Total beer sales for 2007 are down 22% - some seven million pints a day fewer than their peak in 1979. The Guardian has this really nice graphicbreaking down the cost of a pint! What factors lie behind this decline in sales? 1. Deep price discounting by the major supermarkets which has made drinking beer at home more affordable – that said total beer sales (from pubs, clubs, off-licences and supermarkets has also fallen in the long term) 2. The impact of the ban on smoking in public places 3. Short term effects of the desperately poor weather in the summer 4. Changing consumer tastes and preferences, not least the growing market demand for wines 5. Rising incomes – perhaps the demand for beer has a low income elasticity of demand 6. Impact of a 27% rise in indirect taxes on beer over the last ten years – Britain is said to have the highest levels of excise duty in the European Union. 7. Longer working hours and the decline in the liquid lunch, and after-work hours drinking culture Falling demand is putting huge pressure on pubs and clubs to find alternative sources of revenue. That is not necessarily a bad thing! The chances of finding decent food and a drinkable glass or two of wine have improved immeasurably over the years. People’s attitudes and tastes have changed, the regular night or three down the boozer is fast becoming a thing of the past, not least because of changing work habits. Rising costs and falling demand are combining to hit the profits of the beer industry. According to the BBPA: ‘Between 2004 and 2006 the profits of the major brewers in the UK have fallen by 78 per cent. The result of the squeeze is that companies now earn only 0.7 pence per pint profit, compared with the average of 33 pence per pint they pay to the Chancellor in beer duty.’ For more on indirect taxes, the IFS “Fiscal Facts”is well worth looking at British Beer and Pub Association Institute for Fiscal Studies The Guardian: Do we think we’ve had enough? Beer sales plunge as Britons stay at home