Tuesday, 23 August 2022 11:33

The price of beer - an issue of class?

The price of beer - an issue of class?

The price of beer is in the news again. The impact of COVID, energy costs and the war in Ukraine are pushing prices up.

The general points are around increases in the cost of raw materials, production (i.e canning,) energy and the impact of Brexit.

If the price of beer goes up, does it matter? After all no one has to drink it, and many don’t. But the reality is that the price of beer forms part of the Retail Price Index so it is an important economic measure. I suspect – though this is notoriously difficult to prove – that the price of beer has outstripped wage increases over a lengthy period. A recent ONS study showed beer prices easily outstripping wage growth to 2020 before the Covid period. One outcome is the success of Wetherspoons, where you can find a pint of cask beer for as little as £1.39 a pint in some places.

Historically beer was considered part of the normal diet for many workers involved in heavy industrial or agricultural labour and was one focus for the ‘standard of living’ debate about whether living standards fell or rose as industrialisation proceeded after 1800. Indeed water was not generally safe to drink until at least the mid-nineteenth century, and many drank what is now called table beer instead. This was low in alcohol.

More specifically, thanks to a Malt Tax first introduced to fund the country’s wars in the early eighteenth century, the price of brewer-produced beer was considered to be high by the first decades of the nineteenth century. It also made the cost of traditional home brewing prohibitive.

E. P. Thompson in The Making of the English Working Class reports a letter from a magistrate in 1816 arguing that the Malt Tax would lead to revolution. In fact numbers of unregulated and unlicensed premises circumvented the law. Reality intervened with the 1830 Beershops Act, which made the opening of premises specifically to sell beer much easier and much less costly.

Historically the price and quality of beer (the two were related) was determined by Assizes of Ale. These were more commonly used to determine the cost of bread but beer was also covered. An Act of 1604 stipulated innkeepers must sell a quart of good quality beer or ale for a penny and if they failed to do so could be fined twenty shillings for each offence. This Act was not repealed until 1828 but the use of Assizes of Ale was limited in practice to local areas where consumer pressure caused them to be held – Lincoln being one well-known case.

While we can see that historically beer price and quality was regarded as important enough to regulate at least at the level of policy if less often in practice, how to apply this in 2022 suggests both challenges and innovation.

There is no consistent price for beer across the UK, which in itself suggests that cost varies in reaction to local economies and wage conditions. However big breweries and pub companies do exert considerable influence on price. Heineken which owns both breweries and pubs in the UK saw profits rise by 20.6% in the last year and it has decided to raise its beer prices by 8.9%. It’s not energy company territory but the trend of contempt remains clear – massive profits and price hikes.

No doubt other global beer companies such as ABInBev which owns, for example, Stella Artois, have similar plans. Controlling the activities of such corporate monsters and policing their ethical and environmental activities on a global scale is currently done to some extent by shareholders – for example pension schemes were trade unions have trustee appointments than national Governments.

Another way to address the question, again perhaps not as unlikely as might be thought, is for the Government to nationalise in the UK a major brewery and pub company. This was done during the First World War in Carlisle. A state-owned brewery was created together with a pub estate. The benefits were clear – the beer produced was of a good quality and sold at reasonable prices, and the pubs were welcoming places to be in, selling food as well as drink and promoting games.

After 1945 the Labour Government planned to do the same for the new towns then being created. A state-owned brewery would supply beer to state-owned pubs in these new developments. This became law but was frustrated when the Tories returned to Office in 1951.

From the standpoint of 2022 the downsides to this plan are perhaps more obvious than they were 70 years ago. What was planned was in effect what Big Beer managed to create with its own push to monopoly in the 1960s. In East Anglia for example it was hard to find a pub not owned by Watneys. If you didn’t like their keg beer, there was no alternative.

There are other ways of looking at the issue. Firstly by Government regulation rather than control (an updated Assize of Ale model). Secondly, by local community control from below.

The Government already has a significant influence on beer prices and profits through taxation. The impact on global big beer companies would be limited to how much tax they decide to pay in the UK, but mechanisms to provide more effective control should be possible. Another way to achieve something similar is to make sure that all pubs have the right to sell a guest beer from a local brewer. This right exists in the 1980 Beer Orders, but has been eroded by changes in the industry.

Local brewers should have lower costs than Big Beer in some areas, but pricing is always a complex issue in a market economy. They may be able to sell more cheaply than Heineken or ABI but simply undercutting on price is not a complete solution. There are already price undercutters out there with at best doubtful business models, from a worker’s point of view. What is needed is an excellent product at a competitive price.

That is very much Assize of Ale territory. It relies on local brewers perhaps with their own taprooms, working with local pubs and local communities to produce beer to local tastes at an affordable price but one that also provides enough profit to pay staff well and invest. In the current environment that will be no easy task but it remains an important one for the future of good beer, pubs and communities

Expect the controversy to continue! Though Assizes of Ale, Government assistance to brewers and price regulation would all help.

Read 1623 times Last modified on Tuesday, 23 August 2022 13:06
Keith Flett

Keith Flett is convenor of the socialist history seminar at the Institute of Historical Research and has been a member of CAMRA since 1975.