How does a 6 cent increase in the price of a pint by Guinness become a 30 cent increase by publicans?

While there has been some good news when it comes to pricing of late with the cost of energy falling significantly, the rate of inflation dropping back to less than 2 per cent and savage hikes in our shops softening, the price of a pint continues to climb and sometimes by a lot more than the headlines might have you believe.

Tom Mulholland from Dublin got in touch earlier this week to talk about the cost of a pint of plain “hypocrisy”.

But before that, some context

In March, Diageo increased the cost of its products including Guinness, Carlsberg and Smithwick’s by 6 cent with the hike being imposed on publicans kicking in in the middle of April. It came on the back of a 12 cent increase the drinks giant imposed on publicans last year.

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“Like many, we continue to face increased costs across our business – we have kept these increases to a minimum, but it is required for us to maintain a sustainable business for the future,” a Diageo spokeswoman said at the time.

Publicans reacted angrily to the price move, with the Vintners Federation of Ireland saying the decision was “the latest hammer blow to the pub trade and underlines the need for Government to introduce further supports for a sector experiencing unprecedented costs pressures”.

The specific support it – and many in the hospitality sector – was looking for was a reduction in the VAT rate paid from 13 per cent to 9 per cent.

There was more bad news coming down the tracks for publicans and pub goers alike.

Days after the Diageo move, Heineken said the price of its draught products, including both its standard and alcohol-free Heineken and Murphy’s, Beamish and more were also climbing in price – and coincidentally, perhaps – by 6 cent, with that increase set to take effect early in June.

When it come to the vast majority of publicans, the allegation of profiteering is unfair. Many, especially in rural areas, are grimly hanging on as mid-week trade has disappeared

For its part, it blamed the increase on rising costs. “Due to continued increases in underlying costs we need to adjust our pricing on our draught products,” a Heineken Ireland spokesperson said.

“Despite our ongoing efforts to increase productivity and reduce costs, it is impossible for us to absorb all of the increased costs that we have been faced with, and therefore we need to adjust our pricing.”

Now we’re back with Reader Tom.

“In my local “gastro pub” [the 6 cent increase] has resulted in a 30 cent increase in the price of a pint, from €6.10 to €6.40 – a 5 per cent increase!”

Tom says he finds the “hypocrisy of both the vintners and restaurant associations sickening”.

He points out that, when the hike was announced, the VFI described it as “the latest hammer blow to the pub trade” and he added that the Restaurant Association of Ireland “is forever bleating on about how the VAT rate on hospitality has to be lowered by 4 per cent”.

However, Tom says, there is “no other explanation for a 6 cent per pint increase becoming a 30 cent hike to the customer other than some publicans are profiteering on the back of the wholesale price increase (even allowing for excise tax increases in the price to the customer).

“Why do they seem to think it’s acceptable to maintain profit margin from an increase in price of their raw material? In this case they have more than maintained profit margin.”

He asks if “other readers have observed similar opportunistic price rises by publicans in recent weeks? An increase of 10c or 15c to the pint I could understand”.

So, we will leave that open to you. Have you noticed a hike in the price of a pint – or whatever your tipple is – that has displeased you? If so leave your thoughts in the form below.

Now, by way of more context, according to the Central Statistics Office, the average price of a pint of stout in licensed premises last November was €5.64, up 48 cent in the year, while lager cost €6.07, up 50 cent year on the year, but prices vary depending on the establishment.

And for balance, we contacted the representative bodies for the pubs of Ireland. The Licensed Vintners Association, which represents Dublin pubs, declined to comment on the prices in individual pubs saying such discussions were outside its remit.

One source did tell The Irish Times previously that there “are no hard and fast rules about pricing, but in general to maintain margins including VAT, a 6 cent price rise [at the brewers’ end] tends to convert into a 15-20 cent price hike for consumers.”

We also contacted the VFI, which represents publicans outside Dublin

“Firstly, the price of a pint is set by each individual publican and the VFI is prohibited by law from setting prices,” a spokesman said. “When it come to the vast majority of publicans, the allegation of profiteering is unfair. Many, especially in rural areas, are grimly hanging on as mid-week trade has disappeared and turnover is restricted to just Friday and Saturday nights.

“When the suppliers up their prices, publicans have to follow suit with increases of their own simply to cover VAT and margin. Add in the recent increase in minimum wage (with planned further increases over the coming two years) and the change in statutory sick pay and you have a situation where many pubs are finding it increasingly difficult to even come close to making a profit.”

The spokesman pointed out – reasonably – that the price of a pint varies depending on where you live. He cited a pub in Monaghan that charged €5 for a pint until relatively recently, “which is a long way from €6.40″.

“These are community pubs that are reluctant to raise prices, as they understand the pressure their customers are under. The reality is that most publicans are forced into increases,” he said.