Breweries call for sector-specific support to ensure their survival

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To cope with the “tsunami” of rising costs, brewers and trade organizations have called for a reduction in VAT on self-service alcohol, the reintroduction of alcohol duty freezes, the extending coverage of energy bills beyond April 2023, to the implementation of a new customs duty project and a reform of corporate tariffs.

Campaign For Real Ale (CAMRA) chairman Nik Antona said: “Our pubs and breweries are facing a perfect storm of shortages and price hikes, threatening their very survival.

“Not only are energy costs skyrocketing, but the cost of everyday products ranging from CO2 to cleaning products is also skyrocketing, assuming you can get hold of them in the first place.

“This creates a perfect storm for the industry and ultimately the consumer, who will either be faced with price hikes at the bar or the closure of their beloved local.”

In addition, Society of Independent Brewers (SIBA) communications manager Neil Walker explained that while many breweries would like to introduce measures to reduce costs and energy consumption, access to finance, in particular for small breweries, does not always allow it.

Tsunami of costs

Walker said: “Small independent breweries are energy-intensive businesses and although they are always looking for ways to improve their efficiency, recent increases have seen bills rise from an average of 4% of turnover to more by 10%.

“For some, energy bills have skyrocketed by 400% which, combined with other pressures such as CO2 prices, raw materials and transport, threatens their future.

“Many breweries want to introduce measures to reduce their energy consumption by installing green technology but do not always have access to funding to do so, they would greatly benefit from government policies to help them take this step.”

In addition, Ian Fozard, former chairman of SIBA and owner of Rooster Brewery in Harrogate, North Yorkshire, said constantly fluctuating costs made future planning difficult for the sector.

Fozard explained that Roosters saw its CO2 costs quadruple compared to the contract price in September and, although they have since fallen, malt prices have continued to rise.

He said: “All industries have suffered from cost inflation, especially energy costs, but our sector is facing a tsunami of additional costs.

Difficult market

“We don’t know exactly yet, but indications from my maltster indicate the price could go up by a third, although some breweries are telling me more than that.

“The other uncertainty is what’s happening in the pub market. There are a number of pubs closing and this must have an impact on the amount of beer purchased.

” You have the [rising costs] uncertainty on one side [and]depending on who you also sell, you may not be able to sell as much beer next year.

“Then you have to decide if we can pass on some of those costs to a tough market for pubs? It’s a dilemma no doubt, it makes planning difficult, to say the least.

It comes as last month Suffolk-based operator James Pickard, licensee of the Green Dragon and Bungay pub and brewery, said the brewing sector was ‘hit from every angle’ after suppliers to the companies unexpectedly increased their prices for the second time in the third quarter of 2022.

Fozard added: “We just have to hope that as many of us as possible can get out of this as soon as possible.”

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