Beer prices raised. Again.

That’s right. Heineken Malaysia Bhd (HMB) has increased (as of Sunday Apr 15) the prices of their products significantly. We at The Locker & Loft were notified about it a few weeks ago.

A keg of Tiger that used to be RM658 is now RM696, while Guinness, also at RM658 is now RM710. Pretty big jump. But if you ask me, prices should come down instead, as the currency issue has improved.

As usual, no reason was given for the increase. I guess we’re all expected to just swallow it quietly, while it dampens consumer sentiment.

(Refer to The Real Cost of Booze for further reading on the BS that some bars get up to)

Dampening the party?

Dampening the party?

Which brings me to another point. Do you know that breweries charge their clients more for beers when we buy in kegs, ie in bulk?

You can buy one Tiger at a supermarket (duty-paid & legit) for about RM6, sometimes less. This is for an individually-packaged product, which is obviously costlier to produce and stock and transport and recycle. However although we receive our beers in REFILLABLE 30-liter kegs (that we pay a significant deposit for, and we also have to pay for the gas for the beers and their deposits), they charge us more for each beer.

The arrival cost at an outlet for one Tiger (excluding CO2 purchase) is RM7.73, so closer to 8 bucks (excluding all overheads). A supermart probably gets it at RM4+.

This is perverse. When u buy a product that’s sold in 330ml packaging vs 30,000ml packaging, the individual cost for the bulk item should be a LOT lower. If a supermart gets their individually-wrapped beer for RM4, bars should be getting them at below RM4 when refilled into our kegs.

Not RM8. Not by a long shot. Sounds like some profiteering might be goin on.

Beer. Losing its fun?

Beer. Losing its fun?

Breweries cover this by providing (lending, actually) the kegging system and giving monetary incentive to hit ”sales targets” in the contract. I dont think its the job of an outlet to hit a brewery’s sales target. That’s not our role. That is the job of their sales and marketing departments.

The brewery is basically penalizing and rewarding. They penalize bars by over-charging, and reward with the incentive. It seems ridiculous.

When i asked the HMB sales guy about all this, he couldnt answer. (HMB is not known to have the best Sales Dept. An open secret in the industry.).

At a time when many interesting bars are popping up and somewhat rejuvenating the beer scene by selling the drink at very affordable rates, the brewery goes in the other direction. It’s very disappointing. It could reduce consumption significantly. I doubt reasonably-priced outlets (who are already making very thin margins) will be able to absorb the increase.

Maybe HMB prefers quick margins over volume.

Breweries dont seem to have any sort of cooperation or understanding with their clients (outlets) and their consumers (drinkers).

There was no consultation by HMB with the industry about the increase as far as i know. In fact, i doubt there has ever been any two-way conversation about anything regarding the future of the beer industry.

With joints like Uncle Don’s, Brewhouse and their like offering Carlsberg beers at about RM10 a glass all night with many customers, there’s a possibility that HMB’s market share will soon be dented if such outlets expand.

But the problem with having a duopoly is that both breweries seem to collude by raising prices at the same time. This practice has now been made a crime.

Or they’d still be doing it.

I guess it’s back to more house parties with untaxed beers then.

Other options

Other options

Did you know that the breweries are unfortunately partly to blame for the increase in tax for certain spirits last year? As the founder of Alcon, i intermittently dealt with the breweries as i battled the authorities on the high alcohol tax issue. I was surprised with their approach.

The breweries were for years pushing the government to tax alcohol according to the strength of the alcohol. So higher alcohol, higher tax. The government finally listened last year. Thus high alcohol spirits like absinthe, some gins and rums had their taxes increased, and hence prices.

But that has now bit them in the ass. The breweries have resorted to lowering the alcohol in many of their own products to lower their own alcohol taxes, compromising their brands.

This has been done rather low key as well so as not to inform their consumers.

The legendary Guinness Foreign Extra Stout is a legend no more. It’s a watered-down wannabe. From 8% to 6.8% to 5.5%, a shadow of its former bulldog self. To do that to such an iconic drink seems like a disrespect to the brand, and this might eventually backfire in the long term. Either way I reckon it’s time to remove the word ”Extra” from its name.

Maybe Guinness Draught has been watered down as well, who knows. It was already at 4.2% before.

Anchor Beer is now 4%. Haha! Most consumers dont know that.

I assume it was done to save them a few bucks. In fact the breweries hardly do anything exciting anymore for outlets or consumers. Same ol same ol.

Financially however both corporations did pretty well last year. Carlsberg Malaysia’s net profit was RM221 million while HMB’s net profit was RM270 million.

They might have pleased their shareholders, but they’re possibly pissing a lot of others off.

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The real cost of booze

Alcohol tends to be over-priced in many countries, and this is primarily due to two levels of  mark-ups. One is government tax, the other is at the on-trade (ie the outlet level).

Over in Malaysia, the tax is high. However, so are the mark-ups at the outlets, and people tend to blame the government for high prices when outlets also share the blame for this.

Besides last week (when the tax or beer was raised by cents), the alcohol tax hasn’t been raised for TEN years. However, outlets continued to increase prices disproportionately.

Anyway, many outlets add up to 400% for drinks based on their cost of goods sold (COGS), which is kinda extreme. More so for cocktails.

Probably overpriced

Probably overpriced

Here’s an idea on how much the outlets pay for booze, based on suppliers’ pricing.

A glass / pint of Tiger (draught): RM7.45 / RM11.18

A glass / pint of Guinness (draught): RM8.75 / RM13.12

A glass of gin (eg Beefeater): RM4

A glass of vodka (eg Absolut): RM4.40

A glass of Scotch (eg Grant’s / Black Label): RM5.90 / RM7.40

A glass of rum (Bacardi): RM5.28

Pretty decent eh?

Also, they get trade offers, and sales incentives, which includes free kegs / cash / bottles. So the actual cost could be even lower.

There’s this popular and large ground floor joint in BSC that sells mojitos for 30 bucks. I was told by a supplier that they use moonshine rum disguised in a premium bottle! Disgusting if true. At RM30, you can easily afford to give Bacardi or something, rather than a local rum that costs 25 bucks for the whole bottle.

I once saw bartenders at Luna Bar KL pour crap into a bottle of Smirnoff to use for cocktails.

In fact many outlets do this for their cocktails, including hotels. It’s sick.

Beers shouldn't be expensive

Beers shouldn’t be expensive

Anyway, the mark-up (referring to premium drinks, not moonshine) is obviously to cover costs. However, the mark-ups should depend on several factors. Theoretically. Some fancy joints can probably justify higher prices – for example if the place has killer views, a swimming pool, or many professional staff, or nice decor, or spent on ID / decor / sound system, or high monthly costs due to a large space etc.

Unfortunately, even basic to mid-level bars, neighbourhood pubs, and the like also tend to impose very high mark-ups, mostly unjustified. (Prices at many coffeeshops are also quite ridiculous.)

Their extreme mark-ups are probably due to reasons other than mentioned above, such as the desire to make fast money, or greed. Many bar owners are in the business for the money, not the passion of owning and running a bar.

And the F&B business in Malaysia is pretty dirty, that’s for sure. And so are many owners, who underpay their staff with low wages, and charge customers 10% Service Charge, but keep that money meant for staff, for themselves. That’s very common.

Some have decent happy hours, but murder you after that.

So while taxes are high, many outlets are obviously taking advantage as well, thinking that everyone blames the government.

I’ll leave it to the consumer to decide if the bars you go to are pricing their drinks unfairly.

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Politician wants to ban drinks in public

Yup, some clueless government official is at it again.

A new issue has just appeared that will definitely affect us all permanently. A politician wants to ban us from having a drink in any public place. This means you can’t step out of your house perimeter with a drink in your hand anymore. This would mean you can’t have a drink when you’re chilling outdoors in public places, whether during a bbq, at the beach, at a picnic, and at a restaurant or bar with outdoor seating, football games, etc, etc.

Once you allow governments and politicians to start taking away your freedom like that, there’s no stopping them. The religious fanatics will join in try to ban drinks from other places as well, and also ban who knows what else. Because once mindless banning starts, it tends to go further and further.

His main issue is drinking at playgrounds. Agreed, that shouldn’t be allowed. As far as i know, it’s already not allowed, but where is the enforcement?

Already the cops and DBKL etc, abuse their powers, and this guy wants to give them even MORE power?? A very silly idea that will affect us from now till forever.

The only time to say something is now. No use bitching later.

I suggest you make your opinion clear politely at the politician’s FB page below.

https://www.facebook.com/drxavierjayakumar?ref=stream

You can post a comment at the link to the news article on the page.

Pls share this with your friends, on FB, etc.

Thanks, and good luck.

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Ban on open drinking soon

Damn. The Malaysia govt plans to come down on drinking in public, ie anywhere dat’s outside a designated F&B joint/area.

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A brewery contact informed me over the weekend that the law is already being drafted. WTf man. Without any consultation?? They shd have at least spoken to industry players and Alcon before comin out with stupid-ass rules.

This means we wdnt be able to drink booze at beaches, picnics, parks, riversides, outdoor events, maybe even in your own cars, and probably bbqs too (unless u doin it within the garden of your house). Dats boooshit man. I aint gonna take it quietly. Alcon‘s gonna get involved and stir sumtin up. Stay tuned..

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