Credit Suisse predicts retail war will lead to beer price cuts in pubs

The price of beer and lager in pubs is starting to fall across the board – and the trend will continue, according to investment bank Credit Suisse First Boston.

In August, the retail price of beer in the on-trade fell for the first time since the Government began monitoring it in 1987. Although the price drop was small – just 0.1 per cent – analyst Stuart Price, who compiles Credit Suisse’s Beer Commentary, believes it is just the beginning.

He predicts prices will fall by a further one per cent by the end of December and the trend will continue into the new year, as the effect of supermarket price-cutting – and discounting by pub chains such as Yates’ and JD Wetherspoon – begins to bite.

Price says: “The downward pressure is coming from the low inflation environment and discounts from the supermarkets.

“Talk of price competition is anathema in some parts of the industry, but the Government’s investigation into soft drink prices has added to the momentum.”

Trade Secretary Stephen Byers last month said he was thinking of extending the soft drinks investigation to beer prices, with a view to referring the issue to the Office of Fair Trading.

Price’s forecast received a mixed reaction from brewers and pub operators.

Paul Gilham, marketing director of Wolverhampton and Dudley, says: “We have been concerned for some time that the retail selling price of beer has consistently been running ahead of the retail price index. It could not continue indefinitely. Retail prices are falling and will continue to do so.”

A spokesman for Whitbread says: “It is too early to say if prices are falling significantly. We will be monitoring the situation.”

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