David McWilliams and the Guinness Index
Sir, – David McWilliams proposes the humble pint as an alternative to the Big Mac as an indicator of “purchasing-power parity” (“What the Pint of Guinness Index tells us”, Opinion, December 30th).
The Big Mac index has proved popular because the product is generally produced in the same way everywhere, using local ingredients and local labour and with a short lead-time, and so is capable of reflecting local economic circumstances with reasonable accuracy. In addition the key product, food, is subject to few special taxes or restrictions, no matter where it is sold.
Guinness, on the other hand, is manufactured in a small number of locations, reflecting a limited range of local circumstances, and is then exported internationally. Once delivered, the product can be sold in many ways from many different types of outlet. A can bought from train station newsstand will carry a very different set of costs to a pint served in the bar of a luxury hotel.
Alcohol is a special product, attracting additional taxes and sales restrictions that vary widely in different countries. In Ireland for example, acquiring and maintaining a licence to sell alcohol is an expensive process that drives up the cost of selling, while the hours of sale and to whom alcohol can be sold are also heavily restricted, reducing sales volumes and further increasing the cost of sale per item. Then there are local excise and value-added taxes, which in Ireland add around 40 per cent to the price of a pint of the black stuff and which are around 150 per cent higher than their German equivalents. In some countries alcohol sales are forbidden.– Yours, etc,
Phibsboro, Dublin 7.
Sir, – I was extremely disappointed with the article written by David McWilliams. One would think that the only item bought by Irish people is Guinness. There are differentials in price between North and South but the reasons are many and complex.
Recently the results of a comparison between Belfast and Dublin were published. The prices quoted for Dublin were higher than for Belfast, but the cheapest was Dundalk. This highlights the competitive nature of the retail sector.
Price comparisons are often distorted, and beer is sold in different-sized cans with different alcohol content between North and South.
After-sales service can be important. The cost base for retailers in the South is higher due to wage rates (not the just the minimum wage rate), insurance, property tax (rates and water) and VAT and customs duties, among other factors, all of which are to a greater or lesser extent dictated by Government policy, or lack thereof . Distribution supply chains are another issue but I will leave that for another day.
Dundalk retailers will always pay attention to Newry. As long as UK inflation is at 5 per cent and ours is close to zero, we can and will live with a gradual decline in sterling. It is the sudden collapse, like the week after the Brexit result, that we find difficult.
We had a good Christmas with our Shop Local Vouchers.
People would travel North if it was in their short-term economic interest, but the simple fact is that, compared to 2009/10, they have not. – Yours, etc,
Dundalk, Co Louth.
Sir, – Wouldn’t it have better benefited your readers if, instead of giving them a World Guinness Index on Saturday, you’d have presented a Jameson Index? Am I going to book a holiday in Ukraine, simply because the pints there are €3? On the other hand, if you tell me that a Jameson is €2.70 in Ballybunion, I’d have my B&B booked for the bachelor festival, as soon as my next assistance cheque comes in. You know it makes sense. Get your researchers on the case, right away. Best wishes for the year ahead. – Yours, etc,