People choose to spend more on premium drinks during recessions

People will spend more on premium drinking in pubs during the cost-of-living crisis, according to research data.

Speaking at a seminar, hosted by Cask Marque yesterday at Brewers Hall in London, British Guild of Beer Writers’ Beer Writer of the Year, Pete Brown, revealed how the findings from research data illustrated how British people’s drinking habits during times of financial hardship led them to choose to spend more, not less, on high quality drinks.

Speaking to the drinks business, Brown explained that the contradictory move amidst such a volatile time for the economy was led by “people having to cut back on big treats such as holidays and new cars and so reward themselves with premium versions of everyday items”.

He observed how it also met a need for people to feel in control of their own happiness and feel like they still had the power to make choices that improved their lives in some way, rather than simply accepting austerity and explained: “We see premium versions of everyday brands do really well during a recession” and “the good news is that hospitality is the last thing that people want to cut back on”.

Brown highlighted that the data from the report showed that when people fell on hard times, it was actually less likely that they sought out cheap drinks when going out and instead, the belt-tightening mindset of how they felt they were being forced to live actually provoked them into wanting to treat themselves during the times when they did go out.

He highlighted: “Even as people seek to save money, trading down to lower quality drinks is the least preferred option. The cost-of-living concerns make it more, not less, likely that people will choose premium options”.

Brown’s revelations came moments after Wetherspoons chairman Tim Martin had presented how he chose to reduce drinks prices across his chains without offering any differentiation in pricing for beers regardless of calibre, brewery, style or quality.

When questioned as to whether he had considered that Wetherspoons was responsible for devaluing the image of beer, Martin admitted: “I suppose we are in a way” and stated that beer in his pubs was “cheaper”.

Also speaking at the seminar, beer sommelier Annabel Smith revealed how beer should be considered more like food on menus to help people’s understanding and appreciation for premium options, adding that this move would actually assist pubs to sell more beer. She pointed out: “In order to sell more, you need to charge more”.

In direct opposition to Martin’s claim that all beer should be priced in the same way at one low price across the bar, she insisted: “The cost of a pint should never be dictated by ABV, but by provenance, ingredients and the time it takes to prepare and serve. A pricing ladder is critical.”

Brown, having witnessed how pubs and bars do this for all other drinks from gins, tonics, cocktails and wines, but not as frequently for beer, added that the move to price things in one band would be detrimental for the sector and noted that if it continues via pub companies like Wetherspoons, it will become “damaging” for the brewers who make high quality beers as much as “confusing” for consumers looking to differentiate between good quality vs mediocre beers on the bar.

This article was originally published by the drinks business and has been shared with permission.

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