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What chance the Pub?

January 16, 2012

Recently I had a night out with friends and family where a bottle of beer in a local bar cost €4 and the exact same bottle that day in a local supermarket cost €1. So what chance the pub? None.

There is much talk of late in respect of minimum pricing for supermarket off licence alcohol sales and this is of a particular interest of course to our publican and restaurant clients.

With the growth of large supermarket chains the result is a major change in the number of off licence facilities available. Furthermore these facilities are in a position to offer their product at a substantially reduced price than their traditional stand alone competitor. Indeed in many cases these supermarkets are selling beer, spirits and liqueurs at less than what they paid for them simply to entice customers into their premises. Even today’s supermarket radio advertisements have bottled beer as their final big price giveaway of the week as they “try to reduce the price of shopping”.

The effect of this is felt on the hospitality industry particularly in difficult economic circumstances as we all have less money and will find savings wherever possible.

So what happens fiscally if the Government increases the minimum price of alcohol sales in the supermarkets?

• The playing field will be evened in respect of the attractiveness of the pub, i.e. there will not be that much difference in price between going to the pub and buying off sales (or at least not that much to force closure of the pub).
• The Government will secure additional revenue from increases in vat, excise duties, corporation and income tax (assuming continued profitability) when supermarkets increase the price of alcohol.
• Jobs in hospitality will be saved. Pubs will be busier that they would have been earlier. This results in additional revenue due to PAYE/USC/PRSI, vat and income tax etc being collected.
• Supplementary businesses will be impacted positively for example, musicians, taxi drivers, fast food outlets etc from the additional numbers frequenting the pubs and hence the additional revenues outlined above.
• This will also result in less social welfare payments and or emigration and boost employment and opportunities in the sector.
• A & E wards will not have to deal with as many alcohol related injuries/illnesses and as the nations health improves so will our core medical services and there ought to be a reduction in treatment and insurance costs.
• The Lonely Planet Guide describes the traditional Irish pub as a vital component of our tourist industry and a more competitive environment will allow it to flourish.

The biggest saving however is immeasurable. The societal damage that is being caused by the consumption of cheap alcoholic products is and will be devastating. Society and the family unit is in danger as it swaps the public house for kitchens and livings room where there is no closing time and no measures and no one to tell you you’ve had enough.

In the UK, certain cities are earmarked to undergo experimental minimum price charges in an attempt to close off the huge societal problems created by alcohol, its low price and ease of availability. Generations have been lost to the problem and the hope now is that futures may be saved. This is destined to be rolled out across worst effected cities and eventually there will be UK wide minimum price on alcohol sales.

A respectable rise in off sales prices is a positive move on all fronts. It won’t happen quickly enough and hopefully it will be high enough to affect the market place positively. The supermarket will not have to close if it increases the price of alcohol but a large number of Irish pubs certainly will without change.

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