Thursday, 21 January 2010

What's Beer Worth? Poll Results

As you can see if you cast your eyes to the left [poll info now at the foot of this post], the poll over bottled beer mark-ups by independent retailers has closed, with an even spread of results between all four answers. If Pete Brown were here, he could tell me what these statistics mean, but I'll have to draw my own conclusions.

It would be a reasonable conclusion, from the stats, to say that nobody has a clue what retailers actually pay for the beers that they sell. Alternatively, 12 really clued-up retailers took part in the poll, and outside of them, no-one has any idea of what a £2 beer costs the retailer. But exactly half of the respondents thought that the retailers are making big mark-ups.

Without going into too much detail, usual mark-ups on decent quality bottled beer yields 30-40% gross profit (GP). This means that if you buy a beer for £1, selling it for £2 yields around 40% GP (see footnote). Buying it for about £1.20 and selling for £2 gives about 30% GP.

Not all of the beer that gets sold at retail conforms to this. There are some staples that seem to hold their lower price (and lower margin) wherever they are sold - well, except for supermarkets, obviously. Supermarkets work on tiny mark-ups and massive volumes, often driving a hard bargain with the supplier to get a better GP.

There is a school of thought that supermarkets are evil, and shaft the breweries royally to get the best prices. This might be so, but the breweries know what they sign up for when they get into bed with the big boys. I don't feel sorry for any breweries who do this - I'm just baffled as to why they want to devalue their product in such a way.

To answer a specific query from Cooking Lager in a previous post, the prices a supermarket charge have no influence on our pricing structure. We charge a couple of quid for quite a few ordinary brown beers that you can often pick up in the supermarket for about the price that we pay wholesale. What I can say is that 99% of our beer is priced in what see as a fair manner, with very few mark-ups exceeding (or not reaching) the margins mentioned above.

Anyway, the poll results are only half the story - I'm sure you're brimming with questions about this one.

And the picture has nothing to do with the post - it's just one that I'm really proud of of which I am really proud.

If an off-trade retailer is selling a bottle of beer for £2, roughly how much did they pay for it?

50p - 75p 11 (25%)

75p - £1 11 (25%)

£1 - £1.25 12 (27%)

£1.25 - £1.50 10 (22%)

Votes so far: 44
Poll closed

(FOOTNOTE: GP is calculated by looking at what proportion of the selling price is profit, after VAT has been accounted for. It's impossible to make 100% mark-up. I think when most people (either consumers or traders) talk about 100% mark-up, they mean selling it for double what you paid. As you can see in paragraph two, selling for twice the amount you paid actuall yields about 40% GP)


  1. Interesting stuff Zak, though my question was more whether Tesco influenced stocking rather than prices. That you might keep tabs on Tesco and choose not to stock the brands they flog cheap and source brands the punter cannot get at Tesco.

    I can understand why a beer hobbyist would love your store. Lots of unusual beer. Once Tesco stock it, is it unusual enough for the premium a niche retailer has to demand?

  2. Cookie - on the whole, the supermarkets influence neither our stocking nor pricing policies, although there are a few breweries that I've delisted because of their supermarket ubiquity.


Sorry about the word verification - the blog was getting spammed to bits.