Originally posted by Dervock
I had a bit of a hiatus from the site, but felt the need to get back.
I’m originally from Northern Ireland and I was shocked when I went over for Xmas at how cheap beer is there. I was getting a case of macro lager for $11 and craft beer for around $2-$2.50 a bottle! My best buy was 4 Spitfire (500ml)for $6, less than the price for one bottle here.
With the dollar being so strong will we see the price of imports dropping?
You won’t get much chatter here. Better to get on BA (even tho I much prefer this site). As for prices don’t get me started lol  |
Originally posted by jonno
Originally posted by Dervock
I had a bit of a hiatus from the site, but felt the need to get back.
I’m originally from Northern Ireland and I was shocked when I went over for Xmas at how cheap beer is there. I was getting a case of macro lager for $11 and craft beer for around $2-$2.50 a bottle! My best buy was 4 Spitfire (500ml)for $6, less than the price for one bottle here.
With the dollar being so strong will we see the price of imports dropping?
With the currency at a sustained high level for some time (granted more USD than EuR) one would think prices might fall but across the board this does not seem to be the case. Apart from a handful (inc Phoenix and SNPA) prices are at least steady or still rising. Without knowing what other cost factors are at play there appears to be an element of gouging. Unfortunately the local market is conditioned to gradual price rises over time and I think the retailers (inc me) probably don’t push hard enough when currency swings the otherway.
If I look back at pricing history at Slowbeer a lot of our Beligan stuff is $1.50 per bottle more than 18 months ago yet the currency is 0.72 0 0.77 versus high 50s? Yet wholesale prices are rising? A lack of alternative suppliers doesn’t help but that’s life in Australia when relying on imported goods. I can assure you our margins are no greater.
An example of where it does work is high end bike parts. UK websites are doing very well out of Australian customers with the currency movements, seeming a backlash against local wholesalers not prepared to lower pricing in line with currency. Punters are voting with their feet.
You won’t get much chatter here. Better to get on BA (even tho I much prefer this site). As for prices don’t get me started lol
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Stew41
With the currency at a sustained high level for some time (granted more USD than EuR) one would think prices might fall but across the board this does not seem to be the case. Apart from a handful (inc Phoenix and SNPA) prices are at least steady or still rising. Without knowing what other cost factors are at play there appears to be an element of gouging. Unfortunately the local market is conditioned to gradual price rises over time and I think the retailers (inc me) probably don’t push hard enough when currency swings the otherway. If I look back at pricing history at Slowbeer a lot of our Beligan stuff is $1.50 per bottle more than 18 months ago yet the currency is 0.72 0 0.77 versus high 50s? Yet wholesale prices are rising? A lack of alternative suppliers doesn’t help but that’s life in Australia when relying on imported goods. I can assure you our margins are no greater. Interesting - I would have said that prices had come off slightly in the last 6 months, but perhaps that reflects what I’ve been buying. Also that more places have 10% or more off if you buy a mixed dozen. So whilst it’s possible to pay $9 for an Orval it’s not too hard to pay just over $6.
Usually the "gains from appreciation are swallowed up by importers" argument is wrong, but I suspect there’s something to it here. The reason it’s usually wrong is that if importers could have increased their rents they would already have done so. A pure monopolist passes on cost decreases because given their costs they were already screwing consumers as much as they wanted given their demand conditions.
What would allow importers to increase their margins in the face of falling import costs (remembering they’re only slightly falling because lots of the final price is tax, transport and various margins)? Three possibilities: 1. An occasion for collusion amongst importers (very unlikely in my view); 2. Decreased competition (doesn’t seem to be the case); or 3. Demand is increasing at the same time.
3 is my guess: at present fancy beer is doing well and Australian incomes are rising. Importers don’t have to face the choice of cutting their prices or losing sales. But as long as there isn’t further industry concentration, prices will fall eventually.
Unless the $A falls back down of course. |
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Originally posted by hawthorne00
Stew41
With the currency at a sustained high level for some time (granted more USD than EuR) one would think prices might fall but across the board this does not seem to be the case. Apart from a handful (inc Phoenix and SNPA) prices are at least steady or still rising. Without knowing what other cost factors are at play there appears to be an element of gouging. Unfortunately the local market is conditioned to gradual price rises over time and I think the retailers (inc me) probably don’t push hard enough when currency swings the otherway. If I look back at pricing history at Slowbeer a lot of our Beligan stuff is $1.50 per bottle more than 18 months ago yet the currency is 0.72 0 0.77 versus high 50s? Yet wholesale prices are rising? A lack of alternative suppliers doesn’t help but that’s life in Australia when relying on imported goods. I can assure you our margins are no greater. Interesting - I would have said that prices had come off slightly in the last 6 months, but perhaps that reflects what I’ve been buying. Also that more places have 10% or more off if you buy a mixed dozen. So whilst it’s possible to pay $9 for an Orval it’s not too hard to pay just over $6.
Usually the "gains from appreciation are swallowed up by importers" argument is wrong, but I suspect there’s something to it here. The reason it’s usually wrong is that if importers could have increased their rents they would already have done so. A pure monopolist passes on cost decreases because given their costs they were already screwing consumers as much as they wanted given their demand conditions.
What would allow importers to increase their margins in the face of falling import costs (remembering they’re only slightly falling because lots of the final price is tax, transport and various margins)? Three possibilities: 1. An occasion for collusion amongst importers (very unlikely in my view); 2. Decreased competition (doesn’t seem to be the case); or 3. Demand is increasing at the same time.
3 is my guess: at present fancy beer is doing well and Australian incomes are rising. Importers don’t have to face the choice of cutting their prices or losing sales. But as long as there isn’t further industry concentration, prices will fall eventually.
Unless the $A falls back down of course.
Yes coming off on some lines but frankly not wide spread enough given the general AUD performance. A good exmaple is where some of the higher profile Belgian gear is imported by 3 or 4 people (ie a level of competition).
I don’t know why you think the arguement around importers pocketing the currency gain is wrong? I have been in beer and wine retail for 12 years and have seen it applied consistently. The AUD is buying substantially more EuR than 1 or 2 years ago yet pricing is flat (at best). I’m also a corporate banker by trade and in my customer base many large importers of a range of goods have similar strategies with respect to price stickiness.
Of course, to be balanced, I temper my comments pending any future AUD depreciation. I would be very unhappy if importers immediately sought to adjust pricing on the basis of currency. And, to be to be fair to many importers, they may just not have the whip hand when it comes to negotiating with the supplier in Europe or the US.
I agree that factor 3 above is a key driver along with a healthy LACK of competition on the importing side.
with respect to margin protection given the propensity to levy fuel surcharges and the like in recent years I suspect the general approach is to use this lever to help maintain a certain margin BUT I’m sure the seem favourable currency movement as cream. Given currency volatility perhaps they need to build some buffer from time to time. |
Originally posted by Stew41
I don’t know why you think the arguement around importers pocketing the currency gain is wrong? I have been in beer and wine retail for 12 years and have seen it applied consistently. The AUD is buying substantially more EuR than 1 or 2 years ago yet pricing is flat (at best). I’m also a corporate banker by trade and in my customer base many large importers of a range of goods have similar strategies with respect to price stickiness.
I think the argument is usually wrong because it suggests that prior to an appreciation importers aren’t maximising profit. Businesses with market power still face downward-sloping demand curves - they trade off lower sales for higher prices.
Now prices don’t move as much as you might expect due to the currency movement affecting only a small proportion of the final price and also to thing that you mention - a long-term view of the market and the brand, long-term contracts etc. But unless there is lessened competition or firmer demand conditions, they must fall. You might interpret the "must" as economists’ dogma.  |
Originally posted by hawthorne00
Originally posted by Stew41
I don’t know why you think the arguement around importers pocketing the currency gain is wrong? I have been in beer and wine retail for 12 years and have seen it applied consistently. The AUD is buying substantially more EuR than 1 or 2 years ago yet pricing is flat (at best). I’m also a corporate banker by trade and in my customer base many large importers of a range of goods have similar strategies with respect to price stickiness.
I think the argument is usually wrong because it suggests that prior to an appreciation importers aren’t maximising profit. Businesses with market power still face downward-sloping demand curves - they trade off lower sales for higher prices.
Now prices don’t move as much as you might expect due to the currency movement affecting only a small proportion of the final price and also to thing that you mention - a long-term view of the market and the brand, long-term contracts etc. But unless there is lessened competition or firmer demand conditions, they must fall. You might interpret the "must" as economists’ dogma.
Hah - takes me back to my RMIT eco lecture days! |
Originally posted by Dervock
I had a bit of a hiatus from the site, but felt the need to get back.
I’m originally from Northern Ireland and I was shocked when I went over for Xmas at how cheap beer is there. I was getting a case of macro lager for $11 and craft beer for around $2-$2.50 a bottle! My best buy was 4 Spitfire (500ml)for $6, less than the price for one bottle here.
With the dollar being so strong will we see the price of imports dropping?
If your ever back in NI give me a shout and we can have a beer! |
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Originally posted by traPISSED
Originally posted by Dervock
I had a bit of a hiatus from the site, but felt the need to get back.
I’m originally from Northern Ireland and I was shocked when I went over for Xmas at how cheap beer is there. I was getting a case of macro lager for $11 and craft beer for around $2-$2.50 a bottle! My best buy was 4 Spitfire (500ml)for $6, less than the price for one bottle here.
With the dollar being so strong will we see the price of imports dropping?
Certainly will, I’ll be back over next year.
I had planned on making the trip to Hilden but the weather scuttled all my plans!
If your ever back in NI give me a shout and we can have a beer!
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