January/February 2020

Charge More, Sell Less

A premium pricing strategy will do nothing to help the long-term prospects of cask

LAST AUTUMN, the latest edition of the annual Cask Report was published. It recorded cask sales falling more quickly than beer volumes in total, with a 5% drop over the past year, and cask now only accounting for one in seven pints sold in pubs, whereas only a few years ago it was one in six. The report argues that the way to combat this trend is to move towards “premiumisation”, in terms of quality, price and strength. But is that a realistic strategy, or just wishful thinking?

Quality should be taken as a given, and it’s certainly true that inconsistent and often downright poor beer is one of the key reasons deterring people from drinking cask. It is sometimes argued that higher prices will give brewers and pubs more to invest in quality, but that really is putting the cart before the horse. You can’t command a price premium until you have achieved that consistent quality, and at present drinkers won’t pay top dollar for a product that is often something of a lottery. Plus, by charging more, you will inevitably sell less, which may well make the quality issues even worse. Cask is a perishable product that is critically dependent on turnover. It is ill-suited to occupy a low-volume niche.

The historical reason that cask sells at a discount to keg ales and lagers is that it was originally the standard beer in pubs. Keg beers commanded a premium both because they were new innovations and because they incurred more processing and storage costs, with pasteurisation, cooling and CO2 cylinders. Although cask is often portrayed as “better”, it doesn’t inherently cost any more to make than keg, and, while it does take a little more care in the cellar, it isn’t really that difficult to keep well so long as you stick to a few simple rules.

Most cask is consumed by ordinary drinkers, not beer enthusiasts. It is usually the staple ale brand in pubs and is compared with lagers and smooth ales, not with craft keg. Many cask drinkers are people on a limited budget who have little scope to absorb hefty price increases. If cask goes up by 50p a pint, they will switch to smooth or lager. The report says that 59% of drinkers agreed in a poll that cask should cost more, but in practice would they be happy to pay it? In any case, cask beer isn’t exactly cheap at the moment, with the £4 pint very common now. The major exception is Wetherspoon’s, who are the single biggest retailer of cask beer, and an aggressive discounter, which makes it very difficult to shift the perception of the market.

The aspiration to move cask to a higher strength band also seems unrealistic. Yes, in general stronger beers are perceived as “premium” and can command higher prices, but there’s a limit to how much of them people want to drink. Most pub customers want to pace their drinking over a few hours, or will be going on to do something else later, and so don’t want anything too mindblowing. Pubs find it difficult to sell much cask beer above 4.5% ABV: if stronger beers are drunk at all, it’s often just one at the end of the evening.

With effort, premium pricing can certainly be achieved for individual brands and pubs, and for some this may represent a sensible business plan. But it’s just not going to happen for the category in general, and I get rather tired of commentators arguing that cask should cost more while displaying a failure to appreciate the reality of the market on the ground.