Britain's biggest high street pub chain is to cut the price of a
pint of beer to levels not seen since 1989 in a move likely to spark a
price war.
JD Wetherspoon, which runs more than 700 pubs under
the Wetherspoons and Lloyds No 1 brands, will from Monday cut the
prices of a pint of Greene King IPA and a bottle of San Miguel premium
lager to 99p. A bottle of Blossom Hill rosé wine will be £4.99. The
average price of a pint of beer today is about £2.75.
Although
Wetherspoon is no stranger to January sales, the depth and length of
the price cuts has caused a stir among rival high street operators,
many of which are expected to respond with similar cuts.
Robert
Tchenguiz's Town & City Pub Company, which runs more than 150 pubs,
mostly under the Yates's and Litten Tree brands, confirmed yesterday
that it would immediately be reviewing its prices.
Ian
Payne, chairman of Town & City, said: “At that price, you've got to
respond. All the high street operators will, in one form or another,
have to respond or they'll nick your business, especially in this
climate.”
Mr Payne said that for the past six months his company
had been offering ten products, including a pint of John Smith's bitter
and Foster's lager, at £1.25 at about 30 of its outlets, while its
80-strong Yates's chain has been selling Echo Falls wine at £4.95 a
bottle.
“Some of these have been next to Wetherspoons and we've
given them a bloody nose, so we were expecting something like this,” Mr
Payne said. “In some of our other pubs, we do £1.55 and £1.95 offers.
We'll definitely be reviewing these prices and they'll be downwards,
not upwards.”
The move highlights how difficult times are in the
industry and flies in the face of recent government efforts to cut
binge drinking by limiting price-led promotions.
Don Shenker,
the chief executive of Alcohol Concern, said: “Understandably in the
economic climate, businesses need to be competitive and people are
worried by living costs. However, alcohol is not an ordinary commodity
like bread or milk. Alcohol causes harm to the nation's health and
economy, and there appears to be a strong link between cheap alcohol
and the high levels of binge drinking in the UK.”
The Wetherspoon
move has also angered Greene King's pub tenants. Mark Daniels, landlord
of the Tharp Arms, at Chippenham, Cambridgeshire, said: “If I went down
to Wetherspoons and bought their barrels off them at their retail price
of 99p a pint, that's a hell of saving over the price I'm having to pay
Greene King for my barrels at the moment.”
The Wetherspoon price
reductions cover a total of five drink products – a shot of Sailor
Jerry rum with a mixer will be £1.29 and a 75cl bottle of Jacques cider
will be £3.99 – as well as five meals, including cottage pie, chips and
peas, that will cost £2.99.
Mark Brumby, leisure analyst for Blue
Oar Securities, said: “With a number of operators attempting to price
steak-and-ale pies at £8.95 and pints of standard lager at near £3,
this is an important move.”
Wetherspoon strongly rejected any
suggestion that its price cuts would exacerbate irresponsible drinking.
Keith Down, the finance director, said: “Greene King IPA has a
relatively low strength and tends to be an older person's drink rather
than a session ale. We've been very careful about the products we've
chosen.”
Mr Down said that although the prices were well below
the average price of a pint of beer, Wetherspoon's current prices on
the same products were already quite low, with IPA selling for about
£1.69 a pint and a bottle of San Miguel for £1.49.
He said that
the cuts were an extension of the company's normal January sale. “We
are just sharpening our offers,” he said. “We are still quite expensive
relative to the supermarkets.”
John Hutson, the chief executive
of Wetherspoon, which is believed to have enjoyed a reasonable
performance over the Christmas and New Year trading period, sought to
allay fears expressed by its investors over the impact that the price
cuts could have on margins.
He said: “Overall, I don't think that
it will be too damaging to the margin. If our pubs are busy, then
hopefully people will also buy other things.”
