Friday, 2 March 2018

How to reduce the price of beer

In the early 1920s there was general agreement - except, of course, amongst temperance nutcases - that beer was too expensive. But how could the price be reduced?

As far as the public were concerned, many believed that brewers could afford to knock off a penny a pint due to reduced costs. Though, with half of the retail price consisting of tax, the raw materials and labour costs represented only a small fraction.

Brewers had other ideas. To be fair, quite realistic ones. The only way to reduce the price of beer was to cut the tax.

"There has been considerable reduction in the prices of malt, sugar, &c., but hops are costing rather more. As to labour, there has been a general reduction of wages, but not to anything like the extent indicated in the Press—viz., 14s. 6d. per week. In many cases brewers have reduced wages but very slightly, and in few instances has the reduction exceeded half the amount mentioned. As to reductions in the cost of manufacture, these did not occur suddenly, and they were only now beginning to have substantial effect, owing to stock bought at higher prices and running contracts based on a larger output than exists at present. And that effect is largely nullified by the diminishing demand for the finished article, with consequent increase per barrel of all standing and overhead charges. It is not true to say that these savings have been without any disadvantage to the consumer, because most brewers have increased the gravity of their beers and continued to supply them for the same money.

As regards a reduction in price of 1d. per pint, which as shown above would cost about £30,000,000, where is that sum to come from, unless relief from taxation is afforded? It is out of the question to reduce the quality of the article, for one of the chief complaints is that the gravity of the beer is still too low, and brewers are anxious as far as passible to pursue the policy of increasing the gravity and so giving the consumer improved value for his money. Therefore it is futile and impracticable to say that the brewer is "morally and economically compelled to give the people cheaper beer." Any brewery company that reduced prices by even a farthing per half-pint, (12s. a barrel) would wipe out, and very often more than wipe out, its present profits. To reduce by a halfpenny per half-pint (the smallest workable coin and representing 24s. a barrel) would convert the present amount of profit into a loss of at least a corresponding amount. To reduce prices by 3s. or 4s. a barrel, if that were possible, could have no beneficial effect for the consumer because it would represent only a fraction of a farthing per pint.

The next move lies with the Government, and, being brewers themselves on a large scale at Carlisle, they can fully bear out the accuracy of the above statements. The Government are not only brewers but are owners of more than 200 tied or managed licensed houses. If ordinary brewers are morally and economically compelled to give the people cheaper beer, it might be expected that the Government itself would set the example in the State-managed districts, and the fact that they have done nothing of the sort makes it obvious that the contention is unsound. Substantial reduction of the £5 a barrel duty must take place before relief can be given to the consumer."
Brewers' Almanack 1922, pages 149 - 150.

Working men's clubs had been particularly unhappy with the price they had to pay for beer. Which prompted the last wave of new breweries before the 1970's: club breweries. In several parts of the country clubs got together and built their own brewery. There were still three such breweries when I stated drinking: Federation, Yorkshire Clubs and South Wales and Monmouthshire United Clubs Brewery.

The bit about increasing the gravity of beer is interesting. Average OG rose after 1919, but got stuck at around 1043º, which is where it stayed for the rest of the decade:

UK beer output and average OG
Year bulk barrels average OG
1918 19,085,043 1039.81
1919 23,264,533 1030.55
1920 35,047,947 1039.41
1921 34,504,570 1042.61
1922 30,178,731 1042.88
1923 23,948,651 1042.72
1924 25,425,017 1043.04
Brewers' Journal 1921, page 246.
Brewers' Almanack 1928, page 110.

Funnily enough, average OG remianed at just below the level of the last gravity restriction of 1044º.

In 1923, the government did come up with a way of reducing the price of beer by 1d. a pint. But they didn't reduce the 100s per standard barrel tax. They gave a 20s rebate per bulk barrel. Which may sound like it's reducing the tax to 80s. a barrel, but it wasn't. As most beer was below the 1055º of a standard barrel, the reduction was greater for lower gravity beer. Yet another discouragement to brewing stronger beers.

That rebate did leave brewers paying for some of the 1d a pint price reduction. There are 288 pints in a 36-gallon barrel and 20s is 240 d. Meaning 48d - 4s - of the drop came from brewers' profit margins. The rebate would have needed to be 24s to pay for the full cost of the price reduction.

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