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Uncategorised / 30 August 2022

Pubs and brewers send urgent warning of closures and job losses amidst soaring energy bills

Following the rise in the consumer energy price cap, business leaders from across the brewing and pub industry have signed an open letter to the Government and leadership candidates warning small businesses will close and jobs will be lost if immediate action isn’t taken on energy bills for businesses

The letter, signed by six business leaders warns that pub and brewing businesses across the UK are at risk of closure due to out of control energy bills, with upwards of 300% price hikes reported.

Chief Executives of regional and family brewing and pub businesses to international companies came together to raise alarm of the ‘real and serious irreversible’ damage the energy crisis will cause if the Government does not implement an urgent support package that effectively caps the price of energy for businesses.

It is an issue impacting the entirety of the industry’s supply chain, with major CO2 producer, CF Industries announcing it will be ceasing production of what is a critical component in beer production and dispense in pubs, citing market conditions as a key decision driver.

The call from business leaders follows the consumer energy price cap announcement at the end of last week which set raised the limit at which consumer energy bills will be capped.

Representatives from J.W Lees, Greene King, Admiral Taverns, St Austell Brewery, Drake and Morgan and Carlsberg Marstons, who make up the Board of the British Beer and Pub Association noted that whilst action on consumer energy prices was ‘essential’, without relief for businesses many jobs and livelihoods would be lost in the coming months.

William Lees Jones, Managing Director of JW Lees said:

“We have publicans who are experiencing 300% + increases in energy costs and some energy companies are refusing to even quote for supply. 

“In some instances, tenants are giving us notice since their businesses do not stack up with energy at these costs.  These are not just pubs but people’s homes and the hearts of the communities that they sit in.  Government needs to extend the energy cap to business as well as households.”

Nick Mackenzie, chief executive of Greene King, said:

“The huge rise in energy bills is hitting the UK’s pubs hard – just as the sector was starting to recover from the pandemic. Up and down the country our tenants and free trade customers are receiving untenably high bills, with one reporting a rise of £33,000 a year for energy. 

“While the Government has introduced measures to help households cope with this spike in prices, businesses are having to face this alone, and it is only going to get worse come the autumn. Without immediate government intervention to support the sector, we could face the prospect of pubs being unable to pay their bills, jobs being lost and beloved locals across the country forced to close their doors, meaning all the good work done to keep pubs open during the pandemic could be wasted.”

Kevin Georgel, Chief Executive, St Austell Brewery said:

“Having survived the unprecedented challenges arising from the pandemic, pubs and breweries are once again faced with an existential threat because of circumstances beyond their control. The cost of energy threatens to cause mass business failure and the loss of thousands of pubs across the country.

“As an example, one of our tenants – whose current gas contract is ending next week – was quoted yesterday with a 417% increase on what he currently pays for a one-year fixed price deal. It’s unsustainable for publicans to run their businesses in this climate and increases of this scale will more than wipe out the entire profits of the business.

“We are now hugely concerned on behalf of our licensees, who are paying extortionate fees for their energy, and many remain in unsustainable out of contract rates. Some are finding it impossible to find an energy supplier that is willing to provide a contract for a pub. This situation is reflected in our own business where the cost of energy, wider inflation, and reduced trade levels are creating the perfect storm.

“Pubs bring people together and play a critical role in their community and British beer is part of our rich heritage. The market is failing our sector and we need an energy price cap for hospitality before this crisis forces our licensees to close their pubs.

“The government rightly stepped up and helped our sector during the pandemic. This investment in the survival and long-term recovery of the British pub and brewing sector is now at serious risk, unless some urgent and meaningful intervention comes soon.”

Jillian MacLean MBE, Founder & CEO of Drake & Morgan, said:

“The impact of surging energy bills is placing a further strain on our sector, and this, coupled with disposable income pressures is incredibly damaging to our industry. Once again, we find ourselves back in a position of uncertainty, faced with unprecedented challenges, and urgently need our government to step in with a solution.

“Swift intervention and an urgent price cap on energy like households is needed to ensure the survival of businesses and the retention of thousands of jobs.”

Paul Davies, Chief Executive Officer, CarlsbergMarstons said:

“The UK’s brewing industry is facing a crisis far graver than that which we faced during the Covid lockdowns of the past few years. We have seen surging commodity prices and a doubling in the cost of malt, as well as C02, gas and energy costs nearly tripling since 2019.

“On top of all this, our industry has felt the impact of an over 50% rise in aluminium costs for cans, plus rising labour costs. Without immediate, direct Government support, many of the UK’s craft and cask ale breweries will have no choice but to close for good. We are going to lose in one winter, generations of iconic beer brands.”

Chris Jowsey, Chief Executive, Admiral Taverns said:

“The impact of energy price rises on community pubs is truly frightening. One of our licensees reluctantly gave notice to leave his pub, after the cost of electricity increased by 450%, making it impossible to trade profitably. Let’s not forget that for most licensees, the pub is not just their business but also their family home.

“I raised this issue with Minister’s over 6 months ago, but the government has failed to act. A small business price cap is essential if we want to retain local pubs and the jobs and support they provide to their communities across the UK.”

Emma McClarkin, Chief Executive, British Beer and Pub Association said:

“This rise in energy costs will cause more damage to our industry than the pandemic did if nothing is done in the next few weeks, consumers will now be thinking even more carefully about where they spend their money. There are pubs that weathered the storm of the past two years that now face closure because of rocketing energy bills for both them and their customers.

“If we lose them, we not only lose businesses and the jobs that go with them, but also the beating heart of communities across the country where people gather in times of need. We need an energy cap for businesses before it’s too late.”

Read the full letter

Further Reading