Enough to drive you to drink

Unfortunately this is not a statement you will see from grain growers or any other group of food producers. Instead, it is a variation of a statement made last month by Diageo in relation to increasing the price of a pint of Guinness. The drinks conglomerate that produces a range of alcoholic and other tipples, including the much-beloved pint of Guinness, is hiking the price of a pint by between 7c and 10c, depending on whether you want alcohol in your pint or not. 

Protecting the margins
The company explained the need for a price increase imposition on its on-trade customers – pubs, that is – on the basis that Diageo’s margins are being eroded by rising labour costs, high energy costs and ongoing inflation across all areas of the business. Who are we to dispute the veracity of that argument in favour of increasing prices to customers?
Diageo has profit margins to protect and will take whatever actions deemed necessary to maintain those margins. Ultimately, consumer resistance may come back to bite Diageo in the bottom (line), but in the meantime, there is no specific reference to increased ingredient costs being responsible for the price increase Diageo is imposing on publicans. Just as well, given the fact that cereal inputs account for a miniscule portion of stout production costs and growers will quickly affirm that they are not being paid more for their production by brewers or maltsters. In fact, they have seen the price for malting barley halve in recent years, with an almost 25 per cent reduction last year alone. That probably means every other contributor to the production of the famous pint is squeezing Diageo for a fair share of the end price. Good luck to them. 

No control
Unfortunately, as our agri-food economist, Ciaran Fitzgerald, regularly reminds us, those at the production end of the food chain have no control over or exertive pressure to bring to bear on those at the top of the chain, in order to reclaim their ever-increasing production costs. Another Irish-based alcohol drinks producer, Irish Distillers, is also exerting its market strength by heralding a price increase for its world leading Irish whiskey brand, Jameson, with a currently undisclosed price hike to publicans and consumers due to kick in later this month. In this instance, Irish Distillers does, somewhat inexplicably, cite increased grain costs among its list of reasons for increasing the price of a ‘small one’. Not many grain growers would agree with that assessment, or at least whoever was accountable for increased grain costs, it certainly wasn’t the grain grower.
Urban and rural pubs are under pressure from rising costs, in the same ways as Diageo and Irish Distillers. While they have the firepower of iconic drinks brands to impose their will on pubs and consumers, the pubs themselves have only a couple of unpalatable options. Do they pass on the price increase to their customers or accept a lower margin and risk long-term viability? Just as we are witnessing the decline of our farming population, so too are we seeing the continuing demise of the Irish pub. The number of pubs in our rural parish has declined by four-fifths in the past four decades. There is a certain inevitability to that reduction given changing drinking habits, increased rural mobility, strict drink-driving laws, more home drinking, and, certainly, the high, and now increased, cost of alcoholic and non-alcoholic beverages.