The price of a pint — why some people will pay Craft Beer prices (Part One) — Diary Entry 7
Dark Mild, the Beer Pricing Task and the £13 pint.
Milds are one of the most affordable drinks you can buy in a pub — if you ignore cordials and cheap cola. They’re a sweet-ish beer, with the taste and aroma coming more from the beer’s malt (a type of processed barley) and less from the bitter or fruity hops which lead the flavour in other styles of beers. Although, unlike in decades passed, you probably won’t find one in every pub you visit as they’ve fallen out of style. Or they had, until now.
This puts a spanner in the works; it’s a problem for our cognitive processing of beer prices. If milds are now trendy, dark milds in particular, what does this mean for how much we expect to pay?
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‘For years, we have talked about the problem with the discrepancy between packaged prices. Keg as premium, cask as… well, not so premium.’[1]
As Oli, publican of The Kings Arms, South London said; we've been talking about the price of different types of pints for years. (Or maybe you haven’t, depending on your relationship to beer, or if you’ve never worked in a pub.)
Food prices are rising, with crisps costing 9% more in December 2021 [2] than a year earlier, and beer seems to be heading that way too. Production prices for UK brewers rose on average by 7.9% in January 2022 [3], but we don’t yet know the impact this will have at the bar. Although it’s likely brewers, particularly smaller teams, will shield their customers from these increases, at least in part. But we can’t expect it to remain this way forever, and for our favourite breweries to stay in business.
Traditionally, in harder-times, British beer drinkers can turn to the hand pulls to cut their beer bills (that’s if you don’t already drink cask beers, exclusively). It seems you still can, but if the online, beer loving community is right, cask beers are becoming trendy. And when something becomes fashionable, along comes a price to match.
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Cask beers are (usually) the ones which take a bit longer to serve — they spurt from a swan neck-shaped pipe sitting under a polished wooden handle, which takes skill and effort to pump properly. But more often than not, in a pub, drinking beer like this is cheaper than ordering it from a keg tap, or in a bottle or can.
Breweries like Bathams — a family run business which is over 140 years old — based in the Black Country (near Birmingham) is still brewing and selling cask Mild (3.5% alcohol by volume) for around £2.60 a pint (March 2022 [4]).
70 miles up the road in Macclesfield, is a more modern brewery called RedWillow. They’re serving up pints of a similar dark mild, Dark Mild (3.5% alcohol by volume), for £3.60 (March 2022 [5]). So it seems prices, at least for cask mild, are still fairly cheap, but not quite Bathams, cheap.
Left Handed Giant, a younger brewery still, sells their slightly stronger dark mild, Dark Mild (4% alcohol by volume) for £4.60 per pint, down in Bristol (March 2022) [6]. Boxcar Brewing, found in the backstreets in Bethnal Green, London, sell theirs, again, called Dark Mild (3.6% alcohol by volume) in cans for the equivalent of around £4.60 a pint (March 2022 [7]).
To most people, this looks like the same product being sold by different, but similar, businesses for a confusing range of prices. Usually a cheaper price hints at an inferior product, and a higher one as either a luxury good, or a rip-off. (This isn’t a comment on the quality of these beers or their pricing. I’ve had and enjoyed nearly all of them, and the ones I haven’t enjoyed, I haven’t had yet.)
But something that’s expensive to one person, can be cheap to another [8]. Which begs the question: does the name of the brewery or the pub you’re drinking in change what you’re willing to pay for a pint?
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To answer this, we need to look at the cognitive processes involved in deciding if something is worth our money, and how much. When deciding to buy a beer — or anything else — we use two sets of cognitive references.
External Reference Prices (ERPs) [8], which come from the price displayed in the pub, or the number you work out by being ‘that person’ who keeps too close of an eye on what your round will cost.
Next, and most relevant to our example of dark mild, are Internal Reference Prices (IRPs) [8] : the price you expect to pay based on previous purchases. IRPs can also be influenced by knowledge of beer prices in general and fancy pubs in particular — plus knowledge of how far into your overdraft the order is likely to push you. [8]
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In the 1980s, a behavioural economist, Richard H Thaler, used the theory of IPRs to better understand why people are willing to pay what they are.
Traditional economic theory claims that people are driven by the ‘acquisition utility’; meaning the use and happiness you’ll get from your purchase [9]. But Thaler raised an extra question: is the purchase a good deal?
His way of looking at the decision introduced the concept of ‘transaction utility’ — which takes into account the brewery and bar’s overheads when you’re considering the price they’ve chalked up on the draught board. [8]
Thaler considered a person's willingness to pay to be affected by the type of retailer they’re purchasing from — so what kind of bar they’re just wandering into. This led him to develop the Beer Pricing Task: a study based on a hypothetical person, lying on a hot beach and dreaming of their favourite bottled beer — the catch is, the only place open is a pricey up-market hotel bar [10].
We’re led to expect that where the beer has come from, in this case a fancy hotel, will affect the amount a person is willing to pay. Thaler’s study has been replicated more recently, and although it does appear the purchase location makes a difference, it’s only marginal [8]).
One thing that is not taken into account, however, is the beer itself. In Thaler’s scenario, we’re prompted to consider which bar we’d be buying the beer from, but not which beer we’d buy.
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You may remember back in 2017, there was a £13 pint panic [11].
A (then new) brewery from Manchester, Cloudwater, brewed limited edition Double IPA (9% alcohol by volume) which was listed by a pub in London as costing £13 per pint. If you’re into your beers, you’ll probably know that you’re not supposed to buy a beer like that as a pint — meaning the beer was more like £4.50 - £6.50 a glass.
But many people didn't know of this social convention because they didn’t have the IRPs. They hadn’t experienced a beer like it and so wrongly compared the price to a regular pint of tap lager.
'The people complaining about the pricing on this simply do not understand,’ explained a Twitter onlooker. ‘Most connoisseurs wouldn’t blink twice at that price.’ [11]
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Returning to our dark mild example; there may be an Internal Reference Price struggle going on within some of us. As more expensive dark milds are released, our IRPs are being updated [12] and our acceptance for higher prices begins.
But research has indicated IRPs are only useful when we feel the price we’ve paid for similar beer is relevant to the one we’re considering. [13]
Maybe you see the newer, trendier examples as belonging to a different category. Despite fitting official style guidelines for dark milds [14], and often having the same name as the cheaper, more established examples — they’re just not the same, in your eyes. In this case, your dark mild IRPs are irrelevant and you’ve created new, craft dark mild Internal Reference Prices. Which is, maybe, why you’re willing to pay the new, updated price.
Thank you for reading ‘The price of a pint — why some people will pay Craft Beer prices (Part One)’. This piece is a long one, so it’s been split into two.
Next week we’ll be considering what may lead some people to see traditional and craft dark milds to be in the same category, and why some of us don’t.
Watching the English: The Hidden Rules of English Behaviour, by Kate Fox
