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 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 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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Alcohol-tax time??

Budget 2012 will be tabled next week by the government.

Will the tax on alcohol be raised further, although it’s already one of the world’s highest?

I dont know. An outlet owner told me this – “my supplier advised me to order extra stock  now as the tax is going up.”

Malaysian drinkers - screwed for years by the govt and the outlets

Maybe its a rumuor. Either way, that’s why Alcon exists – to fight for fair prices for us from the government and outlets.

Alcon has gotten a lot of media and publicity lately. Hopefully there’s an impact.

We plan a submit a memo to the Ministry of Finance in a few days, so please dont just sign it, but publicize and get your friends to sign too. If we dont hit at least 1.000 signatures, there’s no point handing it over.

Click here.

Do it!

 

PS: Catch the live interview with Alcon reps on BFM (89.9) this Friday at about 6.30pm with me and Ben Ng. Yea!

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Did u know that…

… a pint of Hoegaarden only costs about $12?

And so a half pint is only $6?

Well now u know!

Are drinkers here gettin scammed?

Yup!

Some outlets sell a pint at $25, some close to $30, some more than that! And a half pint close to 20 bucks! Massive marking-up like these should be made a criminal offense dammit. Dats why Malaysians’ purchasing power never improves – greedy, short-term minded businesses.

Not worth half as much as u think

The right price for a pint of Hoegaarden (Carlsberg Malaysia) should be $15 – $20. And a half pint no more than $10. It aint a premium drink.

Bars the world over dont mark-up their prices so much, esp for beer! They aren’t short-term minded capitalistic wannabe millionaires, and rely on a higher turnover over a longer period.

The cost for a pint at a bar in Europe (after mark-up of course, and considering their costs and overheads are much higher) is only between 3 to 4 Euros! (Even if u convert, its between $12-$16).

I wdnt pay more than 20 bucks for this beer.

While bars here mark-up beers like Tiger, Carlsberg etc, by about $5 (max $10), they mark-up Hoegaarden by $20, sometimes more! So here comes the inevitable question – Why??, i  hear u scream.

Good question. Go ask the bar owners. Am sure they’ll come up with some good excuses.

My opinion? Greed.

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