Why Is Water More Expensive than Beer when Alcohol is taxed?
If you go into a pub. You can buy a pint of beer for £2.20. Less than half a pint of mineral water or lemonade can costs £1.30. So per litre, water is more expensive than beer. Yet, beer has a significant tax placed on (The excise duty tax on a pint of beer is 46p April 2009.) In theory, beer should be more expensive than mineral water.
So why is Water more expensive than beer?
- Firstly, the pub prefers beer drinkers to sippers of mineral water. It is not that the pub likes drunk people who are more likely to cause a disturbance. A pub likes people who buy several drinks in an evening. A good drinker may get through 3-4 pints in a couple of hours. But a someone who buys a glass of water is probably just buying a drink to have something on the table. Downing 3-4 pints of water doesn’t have the same attraction as downing 3-4 pints of beer.
- Therefore, the pub is happy to have a lower profit margin on beer than water because the total profit from a beer drinker will be greater than someone nursing a solitary mineral water.