Tag: Cheap beer

| Uncategorised

Some facts about cheap supermarket beer prices

14p per unit

Listen: the idea of minimum pricing worries me a little.  I don’t believe that there is a direct link between Britain’s supposed binge drinking problem and the widespread availability of cheap booze.  And I don’t lay sole blame for the plight of the pub at the door of supermarkets.  OK?

But I wanted to comment on the disquiet in the blogosphere about this whole question of whether supermarkets ever sell beer at below cost price, with some comments on this blog suggesting the entire idea is a myth, and others asking if it’s really plausible that any retail business would sell something on which it makes a loss on a sustained basis.

I don’t blame anyone for thinking this – in a logical world it sounds like an insane idea.  But supermarkets are not always logical – or rather, their logic is different from ours.

Below cost selling DOES happen in supermarkets.  I know this because I’ve had conversations about it with the brewers who sell their beer to supermarkets and with the supermarkets who buy it.  They wouldn’t thank me for sharing this, so I’ll keep it completely anonymous, but here are a few trade secrets.  Well I say that, a lot of it is common knowledge within marketing circles.

Beer is what’s known in the trade as a loss leader.  It’s a common concept.  Most beer bought in the UK off-trade is sold on price promotion.  When you have people spending £200 on a mixed basket of groceries, you can afford to lose a few quid on staple items because you make it back – and more – on the premium items they’ll also be buying in your shop.

We do big supermarket shops in the car, stocking up on heavy items.  That means we keep an eye on the prices of bulky purchases.  Research consistently shows that people respond to newspaper ads for cheap beer, driving to one chain instead of the other because we can save a few quid on slabs of lager.  We assume that everything else will be pretty much the same price, and we may be right – but the cheaper beer supermarket is getting the whole of our spend that it wouldn’t otherwise have, and therefore makes a profit overall.  When we stock up in bulk on beer – at Christmas, bank holidays and big sporting events – supermarkets have to cut deeper and deeper to compete with each other, and this is when it can go below cost price.

Ever wondered why beer is right at the back of the supermarket – about as far away from the door as you can get? As soon as you’ve walked through the sliding doors, the cheap beer has done its job.  You’ve got to walk past all the expensively packaged fresh salad, the healthy looking fruit and veg, the deli counter, the bakery with the smell of fresh bread being pumped into the store, to get the the cheap beer you came for.  That’s why you end up putting a heavy 24-pack in the trolley on top of your bagged lettuce, fresh bread and eggs – doesn’t make sense, does it?  Until you think about it from this perspective, that is.  I’ve heard one supermarket buyer say that if they could, they’d take beer off the shelf as soon as you walk in.  They don’t like not making any money on it, but they see it as a necessity to drive footfall, so they make it work as hard as it possibly can to deliver profit. But it delivers this profit indirectly.

And what of the brewers? The people behind one big beer brand told me that on average, their profit margin is 1p per can.  It’s a grim business.  That’s the average profit – meaning that there’s some volume they make more profit on, and some they make less on.  Meaning sometimes, they end up selling it at a loss.

They have to do this to keep the contract, which they need to maintain volume and market share. Once again, there’s plenty of consumer research that shows mainstream lager drinkers view any big, established brand as being acceptable.  You may prefer Carling to Fosters, for example, but if they didn’t stock Carling, or Fosters was a quid cheaper per slab, you’d be absolutely fine with Fosters instead.  The fact that most beer is put in the trolley by women – who don’t often drink it themselves – further erodes loyalty to any one specific brand.  So supermarkets hold the threat of delisting over the heads of even the biggest, most popular brands.

Recently one chain delisted one very big brand and they eventually had to cave in and concede ground to the brewer.  This was significant, because most of the time the sheer volume market power of big supermarket chains means they can kick and bully all their suppliers – even the biggest – as much as they want.

Another popular ploy is for a supermarket chain to decide at the last minute to give a steep price cut on a brand, without getting the agreement of the brewer first, and then simply sending the brewer the bill for the money the supermarket lost by cutting the price!  I’m not saying the brewer always coughs up.  But sometimes they feel compelled to do so.

These are the tricks of the trade.  I’m not suggesting for one minute that all beer or most beer is sold by supermarkets at a loss.  But this is why some of it is.

| Uncategorised

Consumer Journalism, Gonzo Style

In the mid-nineties I used to dream of writing for Loaded magazine, with no trace of shame or furtive embarrassment. Sure, one month they’d have perky Jo Guest on the cover, or Liz Hurley in her underbashers, but that would be interspersed with Richard E Grant, Frank Skinner or Michael Caine. Scantily clad women were just one of the laddish obsessions featured, and whether it was regular features such as ‘greatest living Englishman’ or ‘drop me bacon sandwich’, comic consumer journalism triumphs such as the Crisps World Cup, or in-depth pieces of travel writing such as the time they endured several days at Mardi Gras without sleep or drove a Land Rover through the Amazon basin, there was a Gonzo intelligence and wit at work that lifted it far above the simple tits, vomit and football formula that lads mags have become. They were living the dream, inspired by Hunter S Thompson’s Gonzo journalism, they became part of the stoeis they covered, making laddish behaviour almost heroic. Around 1999 I realised I was embarrassed to be seen reading it in public – and ‘reading’ had become a bit of a euphemism, as the long articles had disappeared – and I stopped buying it.

Until now. Six weeks ago, I lived the dream and spent an afternoon getting pissed with the editor of Loaded.

The occasion was a return to the old days of inspired consumer features: the Credit Crunch Booze Test. With a looming recession, we have to economise, so what are the best budget and supermarket own label beers? The brief was to do a proper, professional tasting job, which I tried my best to deliver. The results are in the August issue, which actually came out at the beginning of July and is due to come off the shelves any day now – I missed it the first time I looked because it’s not listed in the contents section, but you can find it on page 28-29, between an article on pandas and a feature on inflatable pubs. (You can easily spot this issue on the newsagent’s shelf – it’s the one with a naked lady cupping her bare boobs on the front). In fact here it is:

The editor, Martin Daubney, really knew his way around beer and gave me a run for my money in pinning down the various tasting notes – or lack thereof. Buy the mag for the full results – all I’ll say is that if I ever find myself on my uppers with less than 60p to spend on my beer, I’m off to Lidl. They really do pull it out of the bag. Loaded seems to have had a modest revival – it has proper articles, and interviews with actors such as Christian Bale and James MacEvoy. It is still what it is – the literary equivalent of Carling – but next to Zoo and Nuts it’s like the Economist.

After we tasted the beers Martin asked me if I’d mind moving on to vodkas and whiskies, and the afternoon started to unravel. I needed something to wash away the taste of Aldi’s ‘Voska’ (our expert commented “as they say in Withnail and I, even the wankers on the site wouldn’t drink it.’”), and we repaired to Loaded’s local for a very fine pint of London Pride.

Remembering the heady days of Loaded’s youth, I was excited about where things might go from here. It was a Friday, it was late afternoon, and we were already well-oiled. Would the rest of the gang join us after putting the feature to bed? Perhaps they’d invite along some page three girls. Maybe on the spur of the moment we’d charter a helicopter and fly to Amsterdam for last orders. Literally, anything might happen. But I could never have predicted what did. In a sad sign of the times, Martin looked at his watch, said, “Shit,” downed his pint and profusely apologised. He was running late for some market research focus groups about the magazine, which he had to attend that evening.

I’m just glad Hunter S Thompson didn’t live long enough to see such a thing.