Britain’s independent brewers have urged ministers to step in to save the sector, as research revealed more than 70% of pubs do not expect to survive the winter if nothing is done to ease energy costs.
In a letter to the chancellor, Nadhim Zahawi, independent brewers on Tuesday called for immediate government intervention, warning a once thriving cottage industry was now facing “grave uncertainty”. They said the impact of surging energy bills was being compounded by a fall in sales as households seek to save money, shortages of equipment such as kegs, cans and CO2 gas, and a poor hop harvest pushing up prices.
“We have entered one of the most challenging times for the brewing sector,” the Society of Independent Brewers said, in a letter also signed by the chair of the Campaign for Real Ale. “Small brewers are reporting that their energy bills are doubling or trebling, putting their future ability to brew at risk”.
The warning came as pub operators reported similar rises in energy costs, with reports that some suppliers are refusing to offer new contracts to the sector because they fear pubs may not be able to pay their bills. More than 35% of operators said they had seen their utility costs double, while 30% said their costs had tripled, according to a survey for the trade publication the Morning Advertiser.
One operator said they had been quoted a cost for their energy that was nearly six times higher than on their current contract – with the price per unit shooting up from 14p to 83p.
Almost three-quarters of respondents said they would not be able to afford the increases.
Brewers and pub operators are asking the government to step in to prevent further damage, with reductions in VAT and business rates, caps on energy prices for small businesses, and grants for renewable technology to help lower their energy use.
Heath Ball, managing director of the Frisco Group, which operates three pubs across the south-east of England, said pubs were facing a “doomsday scenario”.
“This energy bill crisis comes on the back of the most testing of times as businesses try to recover from the Covid crisis and I think it poses an even greater threat to the survival of pubs,” he told the Morning Advertiser.
He added that even operators that could afford to pay the elevated prices are not being offered new power contracts because the sector is deemed to be “high risk”. Ball said the government needed to “find a solution to this now or face mass pub and restaurant closures”.
The Society of Independent Brewers represents about 700 independent craft brewers across the UK, including London’s Five Points Brewing, Wales’s Magic Dragon Brewing, and Yorkshire’s Gorilla Brewing Company. It said about 160 small brewers had been lost during the coronavirus lockdown and that at least another 40 had been forced to close this year. Those that survived emerged with average debts of £30,000 which they have had to start repaying.
The letter to Zahawi also expressed concern over delays to the introduction of the “draught relief” policy, a 5% cut to the duty on beer sold in pubs announced by Rishi Sunak in last year’s budget.
In July, the Treasury announced that the outcome of a review of alcohol duty would not be published until the autumn.
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“Many brewers have already factored these duty changes into their planning for next year, but do not know if they will happen on time,” the letter said.
Nik Antona, chair of Camra, said: “Pubgoers and beer drinkers want to see urgent action from government.
“With businesses having pulled out all the stops to make it through the pandemic, it would be a travesty if more of our local, small and independent breweries were forced to close for good now due to the crisis with the cost of energy, goods and doing business.”
Recent months have seen repeated warnings about the impact of rising energy prices on Britain’s high streets and small businesses, with data from the Federation of Small Businesses (FSB) showing more than half of firms expect to stagnate, shrink, or fold in the next 12 months.
Small traders, which between them employ approximately 16 million people, do not currently benefit from the energy price cap, which limits the amount suppliers can charge households.
Figures from the Office for National Statistics show that, in the second quarter of this year, the number of UK businesses fell by 20,200, the largest decline in any quarter for at least five years.
Tina McKenzie, the FSB’s policy and advocacy chair, said last week: “Without help, we are facing a generation of lost businesses, jobs and potential”.