E-Malt.com News article: World: From 9 to 369 minutes of work to buy a beer

The average worker in India has to work for six hours to earn enough money to buy a beer, according to Business Report, August 13.

His counterpart in Colombia must work for one hour and 12 minutes, and in South Africa, the average worker has to work for just over an hour to buy a beer.

But if you're an average worker living in Italy, you'd have made enough money to buy a beer after just nine minutes. If you're in the US, it would take one minute longer - at 10 minutes.

The information from the 11 countries in the chart comes from SABMiller, which has operations in each of these countries. Although the data provides a useful measure of the affordability of beer in each of these countries, it does not provide a definitive insight into the comparative cost of labour or the comparative cost of beer.

Unlike the Big Mac index, which is used to indicate the purchasing power parity between different countries, the use of a beer index would be complicated by the role of factors such as individual country tax and the marketing strategy pursued by management teams in each country. These two factors play less of a differentiating role in the life of a Big Mac.

Nigel Fairbrass of SABMiller cautions against drawing bold conclusions from the data on hours worked per litre of beer. "Beer isn't priced solely on the basis of affordability. The pricing strategy is influenced by the cost of inputs and the competitive situation in individual countries." He says the concept of "average earnings" in many countries stretches across a wide range. Wages in the Colombian capital of Bogota are overwhelmingly higher than those of a farm labourer.

Similarly, there is a huge discrepancy in earnings in China.

It is likely that the relatively low price of beer in China reflects not so much high wages as management's willingness to accept low margins to gain market share. And in Italy the relatively low price of beer not only reflects high average earnings but management's desire to make inroads into the wine-drinking culture in that country.

Tax plays a huge role in the price of beer. The government's attitude to tax on beer can reflect any number of policy perspectives. Governments in some former Soviet Union countries kept taxes relatively low to encourage low-alcohol beer consumption in preference to high-alcohol vodka consumption. In other countries, including South Africa, beer and cigarettes make huge "sin tax" income for the state.

And there's little doubt that the reason beer in India is so relatively expensive in terms of minutes worked is only partly explained by low earnings. The major reason is because of the high tax on beer in that country. Much of this tax is levied at provincial level, where governments appear to regard beer firms as easy prey.

But despite all the moving parts in this index, there should be some acknowledgment that the average South African beer drinker does have to put in a long day's work before he can afford to go on a bender.

Minutes worked to buy a beer

India - 369
Colombia - 72
South Africa - 65
Romania - 34
Poland - 28
Hungary - 26
China - 25
Slovakia - 16
Czech Republic - 12
United States - 10
Italy - 9


15 August, 2007