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.


Alcon – Rockin d nation

By now, all drinkers know the news – alcohol tax has remained unchanged for another year.

I guess it’s good news, altho Alcon‘s ultimate aim is a restructuring followed by a reduction of taxes.

For a non-registered organization, the media coverage of Alcon has been massive.

Big-up to those who have actively contributed to the fight. Here’s a quick round-up of the last one year, with majority of publicity occurring in the last three months.


The Sun


The Sarawak Tribune


TimeOut KL




The New Straits Times


Kwong Wah




Nanyang, i think


AsiaOne News


The Malaysian Insider


The Star


The Star, post-Budget reaction


The Star, random article in June


Hidup, hidup! Hidup Alcon! (sorry to steal your battle cry, Bersih)

Believe it or not, not all are listed here. I left some of the Chinese papers out. Also, there’s a piece about it in my drinking column in Esquire’s October issue. There’s another piece i did for JUICE.

The most recent is the two-page spread in The Star last Saturday, and the BFM interview a week before. There were also our letter(s) just before the Budget in The Star.

Ambik kau!

There’s talk of doing an Alcon launch in KK and Kuching too.

So, Stage 2 (Publicity) is complete. What’s next? Alcon will continue with consumer awareness, and also encourage reasonably-priced outlets, as not all but definitely most over-charge for drinks, tho they wont admit it. Maybe they assume people blame only the government for the prices. Most people still do.

To be frank, the government is only partly to blame. People tend to always fault the government for all their problems! Haha

But the biggest cause of our expensive booze at outlets is very high mark-ups, often 200-300% for beers, and up to 350% for spirits! These are bars, not clubs. It’s unheard of anywhere in the world, and is at the least, unethical.

We’d accept 75% mark-ups, hell even 100%, but more than that is too much. There needs to be a balance, give-and-take. This would translate to less profit initially, but higher turnover, so profit might even increase. Higher turnover also means better incentives from suppliers.

Problem is, they aint in the industry for the passion, that’s for sure. It’s run mostly by quick-buck hunters. Whatever industry they make money from makes no difference to them. As long as it’s lots of money.

I’ll write soon about how many percent of your $$ per drink goes where, and you can decide for yourself if the alcohol industry here is being fair. Maybe i’ll do pie chart. The government and the actual producers receive the least.

I have a feelin even if the government reduces the taxes, consumers aren’t gonna benefit in terms of price reduction, knowing how Malaysian outlets are. Whats the point of all this work then??


The breweries and the spirits companies need to be more responsible. They’re big and influential, but have done virtually nothing to address this situation.

Maybe it’s time they be more responsible and step-up. They tell us to “Drink Responsibly”. How about they “Sell Responsibly”?

At the least, they can create and publicize Recommended Retail Pricing,  so consumers know what’s the deal.

To their credit, Guinness Anchor Bhd (GAB) did give the RRP at outlets for their new German beers. However, this was only after i requested.

Well, at least it’s a start.

When the Euro and US$ dropped very significantly against the ringgit (up to 20%), did consumers benefit at all? Nope! Even tho most of the booze comes from there. Wait if the Euro & US$ rise? They’re sure to make us know it and feel it.

Where’s the basic business ethics in our alcohol industry? Non-existent?

An Alcon member decided to do sumtin about it – he suggested this – get responsible outlets to participate in a win-win partnership with Alcon. If an outlet is determined to be reasonably-priced, they will receive a large, bright badge certified by Alcon that they can display outside their premises, saying Fair Price Outlet.

Consumers who see this will know that outlet has been vouched for by an independent party. And all Alcon members will be notified of the outlet online via direct mail. Great idea.

My buddy is designing the badge now. I can already identify a couple of outlets that qualify. Alcon will work on this next.

Fairness is a simple concept that most short-sighted and money-minded Malaysian businessmen don’t seem to understand. These days, it’s not about win-lose-screw u, but win-win.

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