Tag Archives: pricing

Minimum price for a beer goes up in Ontario

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Canada’s most-populous province has raised the minimum price of case of bottles from CDN$24.00 to CDN$26.50.

Well, in this economy I suppose that shouldn’t be any sort of a surprise. Except, apparently, it’s not economical, but rather smacks of the new Temperance movement.

Toronto Star: Ontario raises minimum price for beer

That 6.7 per cent increase in the floor price of a case, bottle deposit excluded, has nothing to do with supply-and-demand, production costs, overhead or distribution expenses.

Instead, the Liquor Control Board of Ontario sets minimum prices as part of its “social responsibility” mandate established in 1993. Translation: If alcohol is too cheap, you may abuse it.

But documents obtained under Ontario’s freedom-of-information law show that the Ministry of Finance, not the LCBO, pressed for higher beer prices – raising questions about the arm’s-length relationship between the two bodies.

“The Ministry of Finance recommends an increase to the minimum retail price for beer effective November 24, 2008,” says a memo distributed to board members for their Oct. 15 meeting in Toronto.

With only 30 minutes to approve a dozen legal issues, including the minimum price increase, the matter appears to have received limited debate.

“After due deliberation and consideration of the materials and recommendations as set out in them, a motion was made, seconded and carried,” say the meeting minutes.

The written materials distributed to board members provide no explanation of why the new minimum was required, how it fit with the social responsibility mandate, how the increase was calculated and why it was required by Nov. 24.

Instead, the documents merely set out the mechanics of the change, which also affects coolers and low-alcohol spirits, and cite the recommendation of the Ministry of Finance. The last time the minimum price for regular-strength beer was adjusted was October 2005.

Brits don’t pay enough for beer

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At least, that’s what Belgian megabrewer InBev is telling British pub operators.

According to a story by ProBrewer.com, a professional trade site for the brewing industry, an InBev spokesperson claimed that pub operators are loathe to bring their wares above a certain price point.

Steve Kitching, managing director of on-trade sales, said some pub managers treat beer “like petrol” and have a “price point ceiling in mind, which they are wary of breaching.”

“Traditionally, retail pricing was determined purely on margin terms based on retailers’ need to make a certain percentage profit,” Kitching. “Today it’s more about what consumers are willing to pay, but there is still some way to go.”

Of course, Mr. Kitching denied that his statements indicate a pending price jump. Coincidentally, InBev’s Stella Artois is the best-selling lager in the United Kingdom.

The article offers a counter argument from a gentleman named Steve Martin (no, not the American actor/comedian) who manages sales for a chain of pubs.

“In theory the principle is the right one,” Martin said. “However, the expectation of the customer paying more for their liquid may not work. Just look at off-trade volumes and off-trade prices.”

I agree with him. The single largest factor keeping me from spending more time in pubs is that the beer is so overwhemingly more expensive than I can get buying it retail. Sure, I miss out on all that atmosphere, but given a choice of hanging out in a bar drinking some beer, or hanging out on my deck, drinking the same beer at ⅓ the price, I know what I’ll usually pick.

Be warned, our British friends. You may have some price hikes on the horizon. 

(via Brew-Monkey)