Tiers for Beers
A popular statistic overstates the case for deferred pub drinking.
The financial organisation Company Debt claimed:
Every adult in the UK will have to order 124 pints of beer this year to bring pubs back to their pre-COVID levels.
As a whole, the food and accommodation services industry fell by around 43% from 2019 to 2020. The impact of the pandemic remains stark:
How did they calculate the ‘124 pints’ figure?
The calculation goes as follows:
- “Latest estimates suggesting that the UK’s food and beverage industry lost at least £25.66 billion due to COVID-19”. Their article does not give a primary source for this estimate. The two stated sources are Morning Advertiser (a pub trade magazine) and Statista.
- The estimated loss from the “food and beverage industry” is then applied only to pubs. Pubs are a major part of this industry, but not its whole.
- The analysts divides estimated loss by the population estimate of UK adults. The company claims Eurostat has the figure at 52m. For January 2019, the Eurostat estimate is 52.6m. The Office for National Statistics gives a 2019 adult (18+) population estimate of about 52.7m.
- Last, that loss per adult converts into pints, glasses of wine, roast dinners, and packets of crisps. Company Debt do not provide a source for these conversion factors.
What is wrong with this figure?
In 2017, the ONS estimated annual turnover for public houses and bars was about £23bn. It is implausible the industry suffered a “market value loss” of over £25bn.
The Morning Advertiser reported a Lumina Intelligence projection of £14bn losses in 2020 (61%). Pubs suffered a greater reduction compared to other food and accommodation services.
The British Beer & Pub Association estimates a loss of £8.2bn, referring only to beer sales:
£8.2 billion in trade value wiped out from the sector in beer sales alone.
Also, the adult population estimate is a bit low; the average beer price in their calculation is too high.
What should the figure be?
It is uncertain.
If we use the BBPA beer loss estimate as a lower bound, then it is around 39 beers per adult (at £3.90 each).
If we take £22bn to £24bn as an estimate of pub industry turnover in 2019, then¹:
- 45% reduction: 48–53 beer pints per adult. This is in line with all food and accommodation services.
- 65% reduction: 70–76 beer pints per adult. That reduction is a little higher than Lumina Intelligence’s projection.
Rounding, the loss in turnover was about 50-75 pints per adult.
We could get technical: treating the 2019 industry size and 2020 fall as random variables. Based on modelling assumptions², the 90% interval is 58 and 76 pints per adult. The central estimate is 68 pints. If you change those assumptions, the interval also changes.
Non-alcoholic alternatives are available.
¹This calculation uses a UK adult population estimate of 52.673m and average beer price of £3.90.
²Here, I model the 2019 industry estimate as a Normal distribution with mean 23,000 and standard deviation equal to 300. The reduction is a Beta distribution with shape parameters 62 and 40. I ran 10,000 simulations in R.