Northern pint that's hard to beat

A Manchester brewery is selling beer in local pubs at prices the big boys cannot, writes Patrick Tooher

MANCHESTER is the cheapest place in the country to buy a pint of ale, the latest survey from the Campaign for Real Ale is expected to show next week. But despite the fierce competition on price, the smallest of brewers are showing they can thrive.

Some of the lowest-priced beer is supplied by the family-controlled Joseph Holt, one of Manchester's last independent brewers. A pint of best bitter costs 99p, while mild can be supped for just 93p, seriously undercutting its far larger local rivals such as Boddington's and Greenalls.

Holt keeps prices low by keeping a tight rein on costs, especially at the distribution level. Its 110 pubs dotted around some of Manchester's less salubrious suburbs are all within a 20-mile radius of its city-centre brewery. Prices are kept consistently low throughout the estate, as only 10 of Holt's pubs are tenanted. The rest are managed by Holt. High volumes also help. "Our pubs sell more than the average per outlet," says Tim Page, its finance director. "We have a regular clientele. Our beer is not only cheaper than our rivals, but it is just as strong at 4 per cent alcohol by volume."

And in an industry where everything from George, the Hofmeister Bear, to Salvador Dali is fair game for promotional purposes, Holt's eschews advertising altogether.

"We don't have a marketing department," reveals Mr Page. "Our reputation is based on word of mouth."

This somewhat unconventional strategy has worked wonders, as Holt's profits and earnings have risen in each of the past 15 years. The performance is all the more impressive, given a backdrop of falling beer consumption, two severe recessions, increased off-licence sales and the growth in cross- Channel imports.

Holt's experience also goes some way to allaying widespread concerns that the rapid consolidation seen in the industry in recent years, of which Scottish & Newcastle's pounds 425m bid for Courage is but the latest example, would inevitably lead to less consumer choice and higher beer prices.

If anything, the trend is towards an increased polarisation of beer prices. "There is more differential pricing than I can remember in the last 10 years," says Mike Bennett, at the Morning Advertiser, a newspaper for the brewing industry.

While some drinkers in Manchester and elsewhere are imitating high-street shoppers by trading down, buying their beer largely on price, younger, more affluent boozers seem happy to quaff bottles of premium continental lager at up to pounds 2.50 a go.

Similarly, differences in the price of the same pint of beer between one part of town and another are becoming more pronounced as brewers and pub retailers realise that, like food retailing, location is everything. The industry justifies higher prices by saying city centre and family- oriented pubs offer better levels of service and food.

Outside London, Manchester appears to be the city where the practice is most widespread. "There is no city like it in the country," argues David Gordon, managing director of Marstons, brewer of Pedigree bitter. "You can pay pounds 1.50 for a pint of beer in Didsbury or Withington, but the same drink would cost you less than pounds 1 a few miles away in Levenshulme, Cheetham Hill or down the Oldham Road."

Such flexible pricing strategies make it very difficult for some brewers to compete. Marston's, for example, recently wrote down the book value of its 881 pub estate by pounds 9.4m, and the biggest reductions came in Manchester.