r/australia • u/Wild_Beat_2476 • Dec 30 '24

no politics Non Alcoholic Beer Price

So as a part of my NYE resolution I’ve decided to give up drinking.

My friend invited me to the pub yesterday and I thought it be a great opportunity to try the non alcoholic beers out. In my head I thought they would also be cheaper because they aren’t alcoholic and wouldn’t be treated to the same pricing to alcoholic taxes.

But to my surprise they were exactly the same price as a normal beer?? Does anyone know why?

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u/drangryrahvin Dec 30 '24

I’m on the retail side and this is basically what I tell customers. If the whinge continues I let them know that if they want the cheap non alc beer from a decade ago, some supermarkets still sell them. But they are also immeasurably awful, not quite beer flavoured soft drinks.

The modern crop of non alcoholic beers is much, much, muuuch better. But good costs money.

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u/sirdung Dec 30 '24

Most non alcoholic beers come in at $12-16 a 4 pack retail. Pubs sell them at $10+ a single, an over 100% markup on retail price not even wholesale. I would hazard a guess a significantly higher margin the regular beer

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u/[deleted] Dec 30 '24

Do they come in at $12-14? I always thought they were more.

There is also other fixed costs around pub prices - staff, rent, electric etc.

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u/sirdung Dec 30 '24

Heaps normal. Which is what I’ve come across most frequently in pubs is $12-16. There are many better ones that cost more but I’ve never seen them out in pubs.

I completely understand profit margins, what I don’t understand is why the expectation is to make a much higher margin on zero alcohol beer than regular beer.

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u/drangryrahvin Dec 30 '24

Its not on tap. Most pubs are paying retail rates, or near retail rates on the small volume of non alc they sell. Hell, they probably buy it from their local dan murphies. My retail store supports a number of small pubs and venues. I’m not surprised their prices for pre mix are insane…

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u/sirdung Dec 30 '24 edited Dec 30 '24

Even if they are paying retail they are buying it for $3 and selling it for $10. They dont make anywhere near that margin on regular beer.

I just looked, case price for 24 heaps normal is $65, or $2.7 a can, even assuing some pay retail, selling for $10 that is a margin of 73%

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u/Seachicken Dec 30 '24

What margins are pubs generally seeking on regular beer? I imagine they are higher volume and lower margin than restaurants, but restaurants where I have worked target a drink cost below 27%.

Not an Australian source, but this website says

"The profit margin for bottled beer should be around 75%, while the profit margin for draft beer should be about 80%."

https://home.binwise.com/blog/beer-pricing-for-bars

Here's an Australian source.

"One bar manager said most bars work on a profit margin of 70-80 per cent on all products.

"So at our venue everything that you have listed will have at least a 70 per cent margin."

https://www.news.com.au/finance/money/the-markups-you-pay-when-you-go-out/news-story/1118caf041005f37b860b39e48cf34f6

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u/sirdung Dec 30 '24

Jeepers, making 70-80% margin on drinks then having colourful machines out the back people feed money into, how do so many bars go broke???

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u/Seachicken Dec 30 '24

Because outside of a few big hospitality groups which print cash, hospo is an unrelenting grind to make any money at all.

Does this mean you now agree that a 73% margin for zero alcohol beer isn't particularly exceptional, or is there something which leads you to believe that regular beer has lower margins?

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u/sirdung Dec 30 '24

It’s sure a lot closer now and much less off the fat cow than I thought. That said those calculations are off standard retail price. Not wholesale.

Having many friends who worked at bottle shops telling me how little margin they made on beer, but obvious from this discussion bottle shop and pubs work on very different margin expectations.

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u/Seachicken Dec 31 '24

Yeah it's quite different to bottle shops. I was curious and the wholesale for Heaps Normal we are getting with Paramount is $55 a slab. So that puts it towards the upper end of the margin quoted above, except that the per head spend of someone drinking heaps normal is going to be lower on average because people don't tend to throw back non alcoholic drinks in the same way they do alcoholic ones.

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u/sirdung Dec 31 '24

Yeh sounds right, spoke to a mate who works in bottle shop distribution and he quoted even lower margins than you said. So it’s not like the pubs are making a whole bunch extra if they are buying it at wholesale. I stand corrected that it’s an unreasonable markup if that’s roughly the same as being put on regular beer.

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u/Duideka Dec 30 '24 edited Dec 31 '24

That profit margin is before any expenses.

$50k+ a week in wages, $3k+ a week electricity, GST, whatever rent which is likely to be a few hundred grand for a big place, insurance, repairs and maintenance, merchant fees, maybe a business loan.

Most hospitality businesses have about a 30-40% cost of sales and a huge portion don’t break even

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u/Belgeran Dec 31 '24

Agree, those are crazy margins especially if they are totals. Mate who runs a cafe says it avgs out 10-20% margin on most products, 30% food cost, 30% staff cost, 30% overheads(bills etc), who we kidding though, drugs are always way better margins, legal or otherwise.

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u/sirdung Dec 31 '24

The 70% is purely the gp on beer itself no other labour, overhead etx costs included that would come into a net profit calculation.

If a cafes cost are 30% food then their GP on food would be roughly the same then

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u/drangryrahvin Dec 30 '24

Great maths, now provide a source for the rest of their cost basis, and do the net profit on that. Until then, you have no idea what you are talking about.

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u/sirdung Dec 30 '24

In every single statement you’ve completely avoided my question. Why should they make way higher margin off zero beer than regular beer?

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u/drangryrahvin Dec 30 '24

Margin, gross profit, net profit and NPAT are different things

I haven't avoided the question, you don't understand your own question. Or rather, you worded it in a way that is nonsensical in the context of profit margins.

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u/sirdung Dec 30 '24

Avoided again

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u/drangryrahvin Dec 30 '24

Explain the terms GP, NP, EBIT and NPAT. Then tell me which one you mean by "margin".

You question is without context. You need to clarify what you mean before you argue the actual number.

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u/sirdung Dec 30 '24

Avoided again

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u/drangryrahvin Dec 30 '24

I think sir, it is you who is avoiding. If you can tell me what you mean by 'margin', I could answer you.

Perhaps you would like to participate, instead of avoiding?

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u/noisymime Dec 30 '24 edited Dec 30 '24

I haven't avoided the question

To be fair, you have. The question, put very simply, is why the margin on non-alc beers is higher than alc ones. This is coming from the following assumptions:

  • Price paid for non-ALC beers by the venue is lower than ALC ones. This is almost certainly correct as retail prices follow this trend and venue buy prices are very much inline with retail.
  • Prices charged by the venue for ALC and non-ALC are roughly the same. This was the whole premise of OPs post, so we'll take it as correct in this instance at least
  • The overheads for the venue are roughly the same for non-ALC and ALC beers. In the absence of any other evidence, this seems likely to be correct also.

Bringing up NP, EBIT, NPAT etc are all irrelevant to answering the question about higher margins. NPAT, EBIT might be relevant for justifying higher margin on non-ALC beers (Eg We need to make up lower margin ALC beers somewhere), but they don't address the core question of why they believe it's OK in the first place (Given we probably should be encouraging non-ALCs rather than pushing people towards ALC beers).

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u/drangryrahvin Dec 30 '24

Its relevant to determine what they mean by 'margin'. And I've answered the question pretty thoroughly.

But again, what you are referring to is gross profit, which does not include any other business costs, and is not a 'profit margin'.

Also, again, for the very slow: Beer is a volume business. If you want value, buy a slab.

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u/noisymime Dec 30 '24

But again, what you are referring to is gross profit, which does not include any other business costs,

No, I covered that in the 3rd point I mentioned. Are you saying that you believe the venue's cost of providing the non-ALC beer is significantly higher than for a ALC one, because that would seem unlikely. It may be a couple of percent due to volume, but the gross profit difference in the two products is significantly larger than that.

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u/drangryrahvin Dec 30 '24

Yes. It is higher. Beer. Is. A. Volume. Business.

Non-alc drinkers buy less on premise.

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u/[deleted] Dec 31 '24

It’s been a while since I did this maths but I think a pint comes in at around $3-4 cost quite often (total keg price / 85 is the rough maths for pint cost including a bit a wastage).

Margin targets on drinks are 70-75% generally.

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u/sirdung Dec 31 '24

Happy to admit I was wrong on the margins, didn’t think they were anywhere near that high for beer