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ChatterBank1 min ago
Why is beer so expensive
13 Answers
If you take the price of petrol versus that of beer, it seems to me that the price of beer is astronomically expensive. Because the retail cost of both contain significant amounts of tax in one form or another to get the full picture you need to strip out these costs. Petrol has to be extracted from the ground, refined, transported half-way across the world and then around the country. On the other hand beer is mainly water with a bit of this and that added. Yet beer remains so much more expensive than petrol - litre for litre. Why is this? This puzzles me every time I order a pint.
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Let's suppose that a pub and a filling station are side by side. Further, let's assume that they're making transactions at the same rate. i.e. every time someone buys a pint in the pub, someone pays for fuel in the filling station. Lastly, let's assume that they've got the same overheads in terms of rent, rates, staff wages etc.
The publican calculates (for the sake of this example) that he has to make �1 profit from every transaction. The owner of the filling station concurs in this view.
However, the filling station averages 20 litres of petrol in every sale, while the pub is selling one pint of beer each time. That means that the publican has to add �1 to the cost of every single pint, while the filling station only has to add 5p to the cost of a litre of petrol.
So, when liquids are sold in large quantities (as with petrol), it's possible to make a reasonable profit with only a small mark-up. When only small quantities are sold in each transaction, a far bigger profit margin is required, resulting in a much higher price per pint/litre.
Chris
PS: There are, of course, loads of other factors which would need to be considered for a detailed analysis of your question (including different rates of duty) but the essence of my answer holds true.
The publican calculates (for the sake of this example) that he has to make �1 profit from every transaction. The owner of the filling station concurs in this view.
However, the filling station averages 20 litres of petrol in every sale, while the pub is selling one pint of beer each time. That means that the publican has to add �1 to the cost of every single pint, while the filling station only has to add 5p to the cost of a litre of petrol.
So, when liquids are sold in large quantities (as with petrol), it's possible to make a reasonable profit with only a small mark-up. When only small quantities are sold in each transaction, a far bigger profit margin is required, resulting in a much higher price per pint/litre.
Chris
PS: There are, of course, loads of other factors which would need to be considered for a detailed analysis of your question (including different rates of duty) but the essence of my answer holds true.
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