SURGING energy bills and raw material costs mean a rise in the price of beer is just around the corner, pubgoers have been warned.
Customers in Scotland have faced “unprecedented” price rises in the past year with the industry warning of a “perfect storm” created by the cost of living crisis and Russia’s invasion of Ukraine.
Carbon dioxide prices alone have risen by a staggering 3000% while grain costs have shot up by 40% in 2022. Other raw materials such as glass and wheat have also risen.
Soaring costs mean brewers are forced to increase the price of their product, which leaves pubs with little option but to pass it on to consumers.
But for many publicans, a more expensive pint won’t equal more profit.
Louise Maclean, director of Signature Pubs, said the sector is raising its prices because it has no other choice.
She told the Sunday National: “As an industry, we are fighting for survival.
“We don’t want to increase prices but our already declining profits are being wiped out by energy costs increases, business rates, increase in staff costs (which is not a bad thing but we must make mention of it) and price rises in nearly every sector.
“Don’t deride us for charging what we have to – our business model doesn’t work any other way. We aren’t all the size of JD Wetherspoons or the big multinational breweries with beneficial economies of scale and production synergies.
“Our margins haven’t increased in many a year – so we aren’t making any more profit.”
Marc Ferrier, who owns The Thornwood in Glasgow, said the price increases are leading to a change in customer habits.
“What we’re finding is that some people, instead of having three pints have two pints,” he said.
“So I think people will still go to the pub, it might just be that we change our opening hours because it is getting more expensive.
“The prices from the brewers are going up and the thing is once they go up they never come down.
“Every step it takes to get the beer in the glass, it’s going up – and everyone has to get their piece of the cake."
ONS statistics show that the price of a pint across the UK has more than doubled in the last 20 years, going from £2 to £4.20.
But it varies widely between each city, with Scotland’s capital nearing the £5 tipping point.
The type of beer matters too, with craft beers and those with higher ABVs regularly selling for upwards of £5 and £6 in Scotland.
According to industry sources, for the average cost of a pint of beer at 4.25% ABV, around a third will be taken away by taxes, with another third the cost from the brewer. That leaves the pub with the remaining third – £1.40 for the average pint.
Ross Watson, general manager at Nice ‘n’ Sleazy in Glasgow, said customers should expect price rises to come more frequently as the industry becomes more reactive to a volatile market.
“It used to be we would have one price increase a year but now we are getting two per year minimum – and that’s across the board,” he said.
“It’s a lot less consistent than it used to be. Like other businesses, we are impacted by the energy crisis. On top of that, Glasgow City Council has changed the way it does rates, which will now change to every three years instead of five.
“For us, it’s not that the spend is down, people seem to still have the same amount to spend, but the price of everything is going up so people are not buying as much. That means they stay for less time.”
Watson said this means that despite spending the same amount, the profit the bar makes per customer has gone down – and will continue to as prices rise.
For a bar like Watson’s, the around-a-third he takes away from each sale, more and more is being eaten up by energy costs.
One brewery told the Sunday National that despite the high-end prices of some IPAs, the net profit after energy bills, rent and staff costs are paid can be as little as 50p, less than 10% of what the customer paid.
Emma McClarkin, chief executive of the British Beer and Pub Association, said: “For months, there has been absolutely no let-up in the costs being piled onto Scottish brewers and pubs.
“The price increases they’ve experienced this past year have been completely unprecedented, on everything across their supply chains.
“The last thing they want to do is put up prices for struggling customers, but they have simply been left with no other choice.
“The freeze to beer duty announced at the end of 2022 was welcome news, but more needs to be done to protect our pubs and brewers from out-of-control energy prices, and we need urgent reform of business rates in Scotland so that Scottish pubs aren’t at a significant disadvantage compared to those across the Border.”
