nemesis's Journal

Economics at its finest

Saturday 26th April, 2008

A reliable source says that the ACT Government imposed a "minimum drinks price" at pubs and clubs, in an effort to curb the binge drinking "epidemic" (I'll attack that one on another occasion...). This minimum drinks price is $3.00.

Presumably the government's "minimum drinks price" imposition bears some sort of financial penalty to establishments that don't comply.

And the clubs followed suit -- for about a month, or two. But recently, Academy has re-introduced the good old $2 drinks.

Clubs presumably have a nice margin on drinks. A bottle of Bundaberg rum costs about $30 retail. Buying in bulk, the clubs would probably get it for around $20 a bottle. A 700ml bottle will serve 25 drinks, assuming a standard 30ml shot. Clubs tend to use smaller shot glasses for drinks, so they'll get more. By that logic, clubs have a $1.20 margin on a $2.00 drink.

Academy has very likely seen how their profits get smashed by selling drinks at $3 each, instead of $2 each. It would stand to reason that this difference is greater than the fine the government would slap them with otherwise.

This really is economics at its finest.

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