Wednesday, February 18, 2015

Price of beer

I bought a schooner of draft beer in a pub bar in Carlton at lunch today. It was $11 for 425 ml.  Yesterday I bought a dozen long-necked Coopers Sparkling Ale for $56 from Dan Murphy. That is $4-68 per bottle and each bottle contains 750 ml.  The cost of 425ml of the Coopers would be (425/750)*$4-68 or $2-65.

The costs are not directly comparable. The beer in the pub was a draft beer and was not a Coopers but was a good local brand.   But the Coopers bottle is a pretty good brand itself and hence a plausible substitute so the price comparison is not that misleading.

I wonder if it is the size of the price markup on beer - it was 415% - that might be the reason that almost no-one patronises pubs these days.  There were 4 clients in the pub I entered today and none were drinking alcohol - they were eating cheap counter lunches.

Australia has high alcohol taxes, particularly on full strength beer, but the tax is lower per unit quantity on the beer sold in the large containers that hotels buy.  Taxes create absolutely high priced beer but cannot account for these differentials.  Consumption of alcohol creates road death "externalities" but these are better addressed by heavily penalising those who drink-and-drive rather than innocent economics professors seeking a beer with their pork and stir-fried. Finally health costs are real consequences of drinking excessively but not of having a beer with your lunch.

Low patronage due to the enforcement of "drink driving" laws might encourage high prices of pub-provided beer to cover high fixed costs and maybe this is part of the story.  People drink most of their beer at home. I'd be interested to get more evidence on this.  For sure, institutions such as golf clubs are recording low revenues from bar sales and fear on the booze bus is pervasive.

Beer consumption in Australia is at an all time low.   A beer at lunch - part of the traditional Australian life style is also disappearing.  While the health Nazis will applaud this those of us who enjoy a beer do not. Australia does not want to be swamped in an alcoholic culture but nor do we want to become a nation of wowsers. 


  1. I think part of your problem is that you paid $11 for a schooner! It will cost you $5-6 in a pub in most parts of Sydney, including the more fashionable areas. That's a bit over $10/L. Buying a case from the bottle shop works out at around $3/L. So a markup around 250%.

    Not sure about fear of drink driving being the the main cause. Per capita alcohol consumption has been flat for 20 years, but the big change has been an increase in the relative share for wine. I think this just reflects the fact that people are more likely to be having wine at a restaurant or dinner, and less interested in drinking rounds at the pub after work.

  2. A schooner anywhere here is $10+.

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