Leaders from big players in the brewing and pub industry have signed an open letter to the government and Tory leadership candidates warning that small businesses will close and jobs will be lost if immediate action isn’t taken on commercial energy bills.
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 through 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 affecting 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 JW 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 while action on consumer energy prices is essential, without relief for businesses many jobs and livelihoods would be lost in the coming months.
Kevin Georgel, chief executive of 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.”
He added: “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.”
• The full text of the letter can be read here.