The cost of living crisis continues in the UK with the price of beer increasing everywhere though particularly in cities. Pubs are being hit hard by rising energy costs, inflation and the growing cost of ingredients.
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Alan Mahon, founder and CEO of Brewdog, said that production costs are rising faster than inflation, commenting in the Daily Mail:
I used to think ‘perfect storm’ was a cliche until we found ourselves slap bang in the middle of what the industry is facing right now.
Production costs
Mahon went on to say that whilst the cost of ingredients - wheat and barley - are going up, so too are production costs:
What is less visible but equally as important is the things that don't often come to drinkers mind when they think of what goes into beer - such as the eye-watering explosion in carbon dioxide prices which is 3000 percent higher than 12 months ago, on top of soaring energy prices, a pain everyone is feeling right now.
Mahon believes the industry faces an uphill struggle in the long term as pubs try to resolve all these problems simultaneously, though many will be focusing on just surviving the winter.
Alcohol duty
Not helping the situation for consumers is the scrapping of the planned freeze on alcohol duty. The U-turn was made recently by new chancellor Jeremy Hunt and was not received well by those in the industry. Mahon added:
From what we are seeing, the pressures on the industry with cost price inflation challenges and the Chancellor's scrapping of the alcohol duty freeze might make a £7 pint the norm rather than the exception in many places - particularly in bigger cities.
Miles Beale, chief executive of the Wine and Spirit Trade Association (WSTA), said in an article inThe Spirits Business:
The news that the latest chancellor has scrapped the freeze to alcohol duty is extremely disappointing. This is yet another change of plans, which will cause disruption to UK wine and spirit businesses who have spent the last two years being bounced from one crisis to the next.
At £7, a pint of beer will soon become a luxury for a lot of people, with many instead simply to drink at home - putting the hospitality industry in further difficulty. If prices continue to rise at this rate some studies have shown that a price of a pint of beer in 2025 could be as much as £13.98, as per LadBible.
Sources used:
- DailyMail 'Pub goers face £7 pints of lager as perfect storm of 'eyewatering' price hikes for basic ingredients hits brewing industry'
- The Spirits Business'U-turn on alcohol duty freeze ‘extremely disappointing’'
- LadBible 'Pub goers to face £7 beers'
