A new report has found that pubs and breweries will be forced to close if no further financial support for energy bills is provided by the government. The report by Frontier Economics, produced for the British Beer and Pub Association, showed energy bills returning to their regular rate post-March would put pubs and brewers at a loss of 20 per cent on average.
According to the report, the biggest threat to the viability of pubs is still energy costs. This comes on top of rising costs of food and drink due to inflation. The report also found that if the energy relief is not extended past the end of March, many pubs and breweries would “face major financial losses, make no profit and many will be forced to shut up shop.”
Tim Black, Associate Director in Frontier Economics’ retail and consumer team said: “Recent economic shocks of Covid, Brexit and the war in Ukraine have put sustained pressure on businesses. Our analysis shows the pub & brewery sector is facing a combination of surging costs – primarily energy, but also raw materials and wages – and falling demand, as consumers reduce their spending in the face of severe cost of living pressures.
“While there are different impacts across businesses and uncertainty on the outlook, the underlying economics of the sector makes absorbing these shocks incredibly difficult – and some firms will struggle to survive.”
Emma McClarkin, Chief Executive of the British Beer and Pub Association said: “A long-term guarantee that energy costs and contracts will be fair and reasonable come the Spring cannot come soon enough for our pubs and brewers. They are planning now for the months ahead and need assurance that bills won’t rocket and completely wipe out profits.
“This report demonstrates the unique position our sector finds itself in, vulnerable to cost inflation across the entirety of its supply chain and acutely conscious of declining consumer confidence and wanting to avoid increasing prices for struggling customers. It shows how we have tried to remain resilient but that there are simply no further means for brewers and publicans to absorb costs.
“We are urging the Government to seriously consider the impact rocketing energy costs will have not just on the businesses that have to pay them, but the communities they are embedded in and serve across the entirety of the UK. These figures paint a stark, very grim picture of what is to come if our sector does not make the cut for extra support come the 1st of April.”