YOU MAY HAVE spotted a new poster in your local pub giving a breakdown of the price of a pint of stout – and claiming in large letters that there’s “no profit” in it.
The posters have been distributed by the Vintners’ Federation of Ireland, which represents publicans outside the capital, to its members. It’s part of a pre-budget lobbying campaign arguing for urgent government support for the sector to prevent what it predicts will be a wave of pub closures if some relief isn’t offered.
Not everyone agrees with all the publicans’ claims – or their asks.
Alongside longstanding requests for reductions in excise duty and VAT (around 10% and 19% of the cost of the price of the poster’s putative €5.77 pint), the Vintners are now calling for a reduction in the amount publicans pay in social insurance (PRSI) for their employees, as well as a pause on the move towards the living wage which they say will disproportionately hit their sector.
It’s gone up a little since May, when the Vintners got the €5.77 average price from the Central Statistics Office (CSO). As of July – the most recent month for which CSO figures were available at the time of writing – a pint of draught stout was €5.81.
Lager and cider are, of course, more expensive, with average prices of €6.23 and €6.35 respectively. But even if a pint of stout is your only man, its price is on an upward trajectory, with the CSO’s figures pointing to a 29c or 5% increase in the past year, notes Laura Bambrick, head of employment affairs at the Irish Congress of Trade Unions.
She adds that other CSO figures tell a different story about the sector: the statistics agency’s research on deprivation shows one in 12 workers can’t afford a night out every two weeks, a fourfold increase in two years.
“Unions have never denied sector specific challenges and that some businesses are struggling more than others. But any business supports should be targeted and time-limited,” Bambrick said.
In particular, she believes there is an inherent unfairness in sector-wide business supports that would benefit “every pub owner” including those that are “highly profitable”, particularly if they could “leave the poorest paid workers in the economy and the public purse to pick up the bill”.
She noted that the owners of the Temple Bar pub (famously the home of some of Ireland’s most expensive pints) made €7m in profit last year, as reported by the Sunday Business Post last week.
Pat Crotty, chief executive of the VFI, said examples such as these are unfair: there are 6,000 pubs in the country, of which only a small proportion are located in the tourist hotspot of Temple Bar.
While many Dubs may struggle to remember the last time they bought a pint for less than €6, Crotty says that many rural pubs would “kill” to be able to charge even the €5.77 average given on the poster, with a fiver for Guinness a threshold many would fear to cross.
As for the hospitality-wide nature of the VFI’s asks, “from a government point of view, you cannot say ‘if you’re small enough we’ll help you and if you’re big we won’t’”, Crotty argues.
“There are big businesses that get into trouble too. Either something is good for the sector or it’s not. The government could ask what’s the point in helping a business that’s going to fail – the bottom 5%.”
He said the Vintners are taking aim at employer’s PRSI because although many of their workers are on minimum wage, weekend pay premiums push them into a higher category for PRSI purposes, meaning pubs pay 11.05% on top of wages, as opposed to the discounted 8.8% for most minimum wage employees.
He added that the minimum wage increased by over 12% this year, as part of a move towards a national minimum living wage benchmarked to median hourly rates. Crotty argues that the most recent minimum wage hike – which may be followed by another significant increase next year – is well above the rate of inflation.
The Vintners’ poster claims 24% of the price of the “average” pint goes on staff costs.
“All we’re saying is to pause it[the living wage],” Crotty said.
“We’re not saying no more increases, but in the immediate term – because some businesses are going to fail – don’t give them an increase over inflation this year.”
He said pubs paying high rents or with large mortgages are particularly vulnerable because they face so many other cost pressures at the moment.
Then there’s the ongoing rate over VAT, reduced during the pandemic and reinstated to its previous level of 13.5% a year ago much to the hospitality sector’s disappointment.
Crotty characterises this as one of the ways in which the government is “draining the bank accounts” of hospitality businesses, many of whom have no financial safety net if they are met with an unexpected cost, and are not in a healthy enough positition financially to borrow to invest in their business.
“Say you’re doing net €10,000 [turnover] in food over a week. The change in the VAT is worth €22,500 to them [in a year]. That’s a safety net that allows them to breathe,” Crotty said.
This calculation is based on the assumption that, if VAT were reduced, businesses would keep food prices where they are and bank the difference, rather the passing the reduction on to customers.
Greg Caffrey, a divisional organiser with Mandate trade union noted that poster or no poster, customers don’t really get much transparency over where the price of a pint – particularly one costing over €6, €7 or €8 – actually goes. The VFI does not engage in collective bargaining.
He said the low rates of pay in the sector are compounded by having to work unsociable hours.
“As prices continue to climb, it is clear that consumers are absorbing rising costs,” Caffrey said.
“Publicans risk pricing consumers out of the market, and if this trend continues it is likely that we will see even more precarious employments in the licensed trade and possible job losses,” he said.
However, Crotty insists that if customers mulling this poster over their pint could see the reality of the business that served them, they would realise even pubs that look to be thriving are often making very little profit.
“Small businesses are not price makers. They price based on what their market can afford. Even businesses that are busy and healthy are making no money at the end of the day,” he said.
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