The Case for better surveys

SURVEYS UNDER FIRE: Food centre operator Kopitiam slammed Case over its beer price surveys, saying they created a wrong impression. PHOTO: THE STRAITS TIMES


    Mar 17, 2014

    The Case for better surveys

    WORD of advice: Don't drink and poll.

    Case in point: Case - officially the Consumers Association of Singapore - and its little spat with food centre operator Kopitiam over the consumer rights watchdog's survey about beer prices.

    The tiff could have been averted if Case had simply carried out a better survey.

    Case last week issued a report that showed substantial price hikes at two Kopitiam outlets following Singapore's plans to raise alcohol duties.

    Kopitiam in turn accused Case of bad survey methodology. Both parties are correct, which is to say one is just as wrong as the other.

    Let's begin with a fundamental principle: The idea of profiteering is quite tenuous when there is no monopoly or collusion, the product is not in limited supply, and there are viable alternatives to the product.

    That makes the original premise of the survey, which was to investigate complaints about outlets raising their alcohol prices by too much, a little problematic.

    So what if Kopitiam charges an arm and a leg at one of its outlets for a bottle of Tiger Beer? Customers are not forced to get their beer from it.

    It's a functioning market with no obvious sign of collusion. Sellers will price their goods at whatever buyers let them get away with.

    Part of the problem is that there are various reasons why the price of an item might be increased. Rents may have gone up, labour costs may be higher, or, perhaps, the seller simply is not so interested in selling more of an item. Maybe Kopitiam just does not want to have too many people drinking at its outlets.

    It could also be that some of the outlets that raised prices are simply catching up with their peers.

    Kopitiam's Serangoon North outlet, for example, was found by Case to have increased its price by $1.30, from $5.50 to $6.80 per bottle.

    But Case also found a nearby competitor that raised its price by 50 cents, from $5.80 to $6.30.

    So, yes, Kopitiam may have raised prices more than its peers, but it was doing so from a lower base.

    Case's idea that there is an "acceptable level" for the price hikes is therefore flawed.

    The Serangoon North example actually raises another problem with Case's survey, which is that the prices used for some outlets were about one week apart from those of other outlets.

    Kopitiam said that it had pulled back on some of its initial price hikes during that time. As Kopitiam protested to Case: "This is obviously not comparing apples to apples."

    Case also ignored nearby outlets that may have charged more than the ones that had received complaints, on the premise that its aim was only to help customers "to look for outlets that increased beer prices that are close to the excise-tax increase or lower".

    Hence "we channelled our resources to just doing that. Therefore, telling us that someone was selling beer at a price more than you did was irrelevant," Case told Kopitiam.

    Still, by not comparing like with like and by setting certain outlets' prices as upper limits for no better reason than those outlets having received complaints, Case should have known that it could have created an impression that some outlets were more expensive than they actually were.

    Kopitiam was correct to take issue with Case's methodology, but let's not let them off the hook.

    At one outlet, Kopitiam raised the price of its beer by $1.30 to $6.80, and a week later lowered it to $6.30. In all likelihood, the company probably tried to raise its prices as much as it could before realising that it may have been over-enthusiastic in doing so.

    There is nothing technically wrong with that, but this might leave a sour aftertaste for some customers.

    For consumers, this should be a lesson in healthy scepticism about surveys, especially those with alcohol in the mix.

    For Case and Kopitiam, maybe they should just sit down and settle it over a pint.