A pint could set you back £10: Brewery boss warns pubs would have to charge a tenner if they pass on rising costs to punters
- Brewery chiefs say businesses are in a ‘really difficult position’ due to costs
- One in three pubs faces closure in the next 12 months, new research shows
- Pub closures have risen by an estimated 180 percent in recent months
A brewery boss said a single pint could set Brits back £10 if breweries were to pass on all their costs to consumers, as they warned that the current economic climate is a ‘perfect storm’ for manufacturing and nighttime industries.
Charlene Lyons, Chief Executive of Black Sheep Brewery in Yorkshire, said her business is in a ‘really difficult position’ after manufacturing costs rose by ‘hundreds of percent’ in recent months.
Speaking to GB News on Wednesday she explained businesses are having to absorb as much of the rise as possible.
It comes as nighttime industries also face increasingly difficult battles to stay afloat after plummeting almost 50 percent in value between 2019 and 2021.
Figures show the number of bars and pubs closing in 2022 rose by more than 180 percent compared to the previous year as punters chose to stay at home instead.
It was announced in January that the current level of government support with energy bills for businesses will drastically reducing from the end of March
Charlene Lyons, Chief Executive of Black Sheep Brewery in Yorkshire, said her business is in a ‘really difficult position’
Rising energy prices, the cost of living crisis and impact of the coronavirus pandemic have all been blamed for the industry’s decline.
Ms Lyons told the channel: ‘To be absolutely clear we are not putting our prices up to be £10 per pint.
‘Of course we can’t do that because people wouldn’t pay £10 per pint and nor would we expect them to.’
Pints from the Black Sheep Brewery currently range from £4.20 to £4.80 each, but she stressed the individual price is set by publicans and not the brewery.
She described how previous price rises of 15 to 18 percent have been eclipsed since the pandemic, with jumps of hundreds of percent at once.
‘Energy and fuel is absolutely crippling. The recent support package from the government is significantly less than the one that is currently in place so we’re all trying to think differently and strategically about how we operate.
‘It’s not easy. We’ve got the Covid overhang which is very much there. We’ve got the cost of living crisis, we’ve got the macro-economic pressures, we’ve got the war in Ukraine.
‘It’s the perfect storm and we are all trying to work collaboratively together to come up with plans and strategies that work.’
Her comments come as new figures show nighttime industries, which were worth £40 billion to the economy in 2021, plummeted to just £24 billion two years later amid the impact of the coronavirus pandemic.
Although there was somewhat of a bounce back in 2022, closures rocketed as for many small and independent businesses the return in footfall came too little, too late.
Energy bills is one of the top reasons many pubs and bars are facing closure.
It was announced in January that the current level of government support with energy bills for businesses will drastically reducing from the end of March.
Although energy prices are predicted to start coming down, businesses say they will be unable to afford to pay the high prices with the new scheme set to pay out significantly less.
The 12-month scheme set to take over in April will see most businesses receive a maximum discount of £19.61 per megawatt hour if wholesale energy costs exceed £302 per megawatt hour.
Ms Lyons said: ‘Energy and fuel is absolutely crippling. The recent support package from the government is significantly less than the one that is currently in place’
By comparison, upon the introduction of the current scheme it was estimated businesses on fixed-term contracts would receive a discount of around £379 per megawatt hour, with a maximum discount of £345 per megawatt hour for other contract types.
At face value, the new scheme therefore provides just five percent of the level of discount under the current scheme.
Concerns were echoed on Wednesday by CEO of the Nighttime Industries Association, Michael Kill. The association represents all sorts of venues including theatres, cinemas, nightclubs and music venues.
He told the Today programme: ‘Two of the businesses that are really struggling are the cultural sector and independent businesses that we see across high streets that are represented late at night.
For us at the moment, it is still hugely challenging and because of things like consumer mobility, the industrial action side and cost inflation, we are seeing many of them suffering and without doubt have seen a huge amount go to the wall in the early part of this year.’
He described the ‘precarious position’ many venues find themselves in: ‘The challenge we have for businesses on the ground is they have seen a 40 percent increase in their operating costs.
‘If you couple that with a tentative 15 percent drop in disposable income and attendance then you start to get a perfect storm – particularly as they are sucking up the position for suppliers and passing on those additional costs.’
Meanwhile leading trades bodies which represent pubs and inns across the UK wrote to business secretary Grant Shapps last week to call for more help for businesses.
Research by AlixPartners and CGA found that around 18 premises closed per day in the fourth quarter of 2022 and that one in three pubs faces shutting their doors in the next 12 months.
It also revealed 16 percent of premises have no cash reserves left.
Trade bodies UKHospitality, Hospitality Ulster, BBPA and the BII wrote to Mr Shapps calling for urgent help to prevent more closures.
Their joint statement said: ‘We are calling on the Secretary of State for BEIS to recognise the impossible situation facing our nation’s pubs, bars, restaurants, brewers and all those venues in hospitality, all of whom support communities across the whole of the UK.
‘Government must ensure suppliers deliver a framework of fair and reasonable energy costs for hospitality businesses, and direct energy companies to allow those who were forced into contracts in 2022 at untenable rates to renegotiate, reflecting the now much lower wholesale prices, but also the record-breaking profits these suppliers have announced.
‘Formally recognising our sector as an energy intensive and vulnerable area of the economy, as it has been throughout the pandemic and beyond, would also allow them access to the enhanced support under the EBDS.
‘Without this, thousands of otherwise viable businesses at the heart of their communities will be lost, along with local, flexible, skilled employment. The growth that Government needs can and will come from our sector, but without the support on energy bills the results will be catastrophic.’
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