Beer Monopoly




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Posted January 2016


Nice beers, shame about the price


Craft beer in Israel │Have you ever wondered about those self-anointed restaurant critics, who leave such idiotic verdicts on TripAdvisor like “nice food, shame about the price of beer”? Goodness me, why didn’t they go to McDonald’s and ask for tap water if they thought the price of beer too high? In fact, the complaints were mostly lodged against eating places in the UK, which means those misers have seen nothing yet. They have not been to Israel., a travel metasearch engine, recently posted its 2015 Beer Price Index, which lists 75 city destinations around the world. Whereas Poland’s Krakow is the cheapest watering hole - overall average price is USD 1.66 for 330 ml beer –, which has made it notoriously popular with stag night punters, Tel Aviv is the third most expensive. Prices for a 330 ml bottle of beer range between USD 2.06 in supermarkets and USD 9.53 in bars, says GoEuro, which translates into an average price of USD 5.79. Only in Hong Kong and Switzerland’s Geneva is beer more expensive.


What exactly makes beer so shockingly pricey in Israel? It’s not the brewers’ voraciousness for lucre, that’s for sure. It’s the government’s. Two years ago, the excise on beer was almost doubled to USD 105 per hl, with no tax breaks for the little guys. It would have been small consolation to Israel’s brewers that their taxman is not the most ravenous – his pals in Norway are the uncrowned Kings of Greed, levying almost USD 280 per hl – if they had not carried high costs already: for quality raw materials, customized production equipment, packaging, financing and much else.


In retrospect, I can say that the effects of the tax hike were near-disastrous. When I first wrote about Israeli craft brewers three years ago, it seemed that they were on a roll. An estimated two dozen or so (note: numbers are a tricky business in Israel) had set up shop since the latter half of the Noughties. Having plucked up courage to take the plunge, they had turned their passion for beer into a business, which is no small feat in a country infamous for its red tape; they were finally enjoying a well-earned and much needed media fame, both at home and abroad; not enough, due to their tireless evangelizing, they had managed to slowly change the general perception of beer. Before craft beers hit the shelves, Israel did not have a beer culture worth the name and domestic beers available suffered under the image of “yellow fizzy water”. It was thanks to the craft brewers that beer was gradually becoming a drink you could savour even if you were not a beer snob.


Does this story sound familiar? Indeed, so far so American. Alas, then came the tax hike and Israeli craft brewers hit a glass ceiling. No, that’s the wrong metaphor. I think they hit a wall. There have been no major new openings, causing the media to cut back on loud beer stories, which in turn disheartened other hopefuls. Besides, before the tax raise, craft brewers’ profits would have been razor thin, if that. They are definitely no better today as craft brewers were forced to absorb most of the excise themselves. This may explain why no one has been so foolhardy as to venture into craft brewing all the while his peers continue to struggle.


Fortunately, it’s not all gloom and doom. This is Israel. Here craft brewers are a hardy lot. They took up the challenge and carried on raising the profile of craft beer. No doubt, consumer-wise, there is potential for craft beer consumption to grow. As far as I can tell, Israeli beer consumers, fall into three broad categories. That’s a gross simplification of the highly heterogeneous Israeli consumer base, but never mind. There is the biggest group of all – the mainstream drinkers - who like their Goldstar and Maccabee brands (Israel’s versions of Miller and Bud if you like) and who drink on a daily basis; then there is a smaller group, the in-betweeners, who drink both mainstream, craft and imported beers, though only once in a while; and lastly there are the beer geeks.


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