Brewgooder boss warns of £7 a pint as costs soar

[Chippy_Tea]

Spiralling production costs could drive up the average price of a pint of beer to £7 in some cities, a Scottish brewer has warned.

Brewgooder chief executive Alan Mahon said the price of raw ingredients, such as wheat and barley, were rising faster than the rate of inflation.

He also pointed to energy prices soaring to "eye-watering levels".

Mr Mahon added that carbon dioxide was now costing 3,000% more than it did this time last year.

He said: "I used to think 'perfect storm' was a cliché until we found ourselves slap bang in the middle of what the industry is facing right now.

"It is perhaps a greater long-term challenge than that created by rolling Covid lockdowns.

"From what we are seeing, the pressures on the industry with cost price inflation challenges and the chancellor's scrapping of the alcohol duty freeze might make a £7 pint the norm rather than the exception in many places - particularly in bigger cities."

Mr Mahon, who co-founded Brewgooder in 2016, added: "This is bound to make a pint a relative luxury for a lot of people, something we should all be concerned about and force us all to take stock of the challenges facing the beer industry."

Earlier this year, research by consultancy firm CGA found that the average price of a pint of beer in the UK was £3.95, although there was considerable variation around the country.

Jim Rowan, managing director at wholesaler Dunns Food and Drinks, which serves more than 4,000 hospitality customers across Scotland, said brewers' production costs had already seen prices hiked twice this year.

He said: "Pubs etc have been passing these increases on to the public and, so far, the consumer has been understanding.

"Like all products there is a glass ceiling which generally you can't go through. It used to be £5 per pint, now it's £6 - £7 per pint in some cities is now in sight."

https://www.bbc.co.uk/news/uk-scotland-scotland-business-63379044

 

[Beermonster66]

I'm just back from Houston, 1st time in 3 years. The bars I visited were charging $7 on average for a 12oz (draft or can) IPA. It never bothered me before because A) the exchange rate was far higher and B) the company was paying. B still applies so I wasn't really bothered.

 

[Stan's Brew]

I can brew 36p* a pint session ale at the moment, used to be around 25p, I'm expecting it to rise to around 50p a pint.

Harrybrew69 owner of Harrisons Brewery on YT calculated that he was producing at 22p a pint about a month ago, small craft brewer.

It really is extraordinary how the big breweries can reach £7 a pint but then there are shareholders to please, banksters to pay off and multiple middle men including HMRC skimming all the way along the supply chain.

* not taking into account any capital cost of the equipment, but does include raw ingredients, electricity, cold storage and serving

 

[SMP Brewery]

And most importantly staff to pay at a decent wage.

 

[Graz]

It won't though will it, basic supply and demand economics.

As the consumer (us) are also feeling the pinch we won't be going out and paying £7 for a pint, the pubs will sell less beer and therefore so will the breweries. Prices will then be dropped to try to stimulate the market or the brewery continues to sell less beer and has to either scale down the whole operation (less profit) or go bust.

The other alternative is we all start getting 10-15% pay rises per year to counter the cost of living crisis and then we'd be able to afford the £7 beer but that scenario doesn't have a happy ending either.

As it always happens people will drink more at home and either not go out or ensure you're well lubricated before going out for one or two £7 beers as opposed to 5 or 6 £4 beers. Then the market will adjust.

Whilst you can still get semi decent lager in Lidl for £1.20 a bottle the pubs and breweries supplying them are screwed. Even better to make your own

 

[chthon]

When I went to London beginning of September, we already had an average price of £7 per pint. London prices?

 

[Chippy_Tea]

When I went to London beginning of September, we already had an average price of £7 per pint. London prices?

Wages in London are higher than elsewhere so £7 is easier to stomach, if this becomes the norm elsewhere at a time when people are not going to have much spare cash pubs are going to close and people are going to lose their jobs.

 

[Jordang]

Tbh £6+ a pint is pretty commonplace now anyway.

 

[An Ankoù]

I'm horrified to read this. Last time I was on your side of the Ditch it was around £4 a pint in Bournemouth/Poole. Looking at the homebrew stores, I don't see massive increases in the price of grain and hops although there have been some grain increases of about 10-15%. Is it all energy costs that are pushing up the prices?
How can Brewers like Marstons and Theakstons still afford to supply the likes of Asda and Tesco with 4 bottles for £6 or whatever it is now? Is it the pubs that are getting greedy?

Logically, a massive disparity should start to open up between the price of a pint of beer and a pint of cider since there's little energy used and apples, well, grow on trees! I bet it doesn't happen, though.

 

[moto748]

How can Brewers like Marstons and Theakstons still afford to supply the likes of Asda and Tesco with 4 bottles for £6 or whatever it is now? Is it the pubs that are getting greedy?

That's a good question.

 

[Tommo 2]

At the rate pubs have been closing all around the country in the last few years , the price of a pint won’t matter anyway , it’s becoming to much of a luxury that normal working folk will never be able afford a night out. If it is that all the major brewery’s are getting greedy then they will only cut there own throats in the end , people now days only have so much money and with inflation and all the other price increases, beer just won’t come into the equation. Amen to home brewers , it’s the way to go.

 

[Tanglefoot]

Rising electricity, rent, rates, wage and transport costs probably have more to do with price rises than beer ingredients though like everything else those have risen steeply also.

We only have one pub left which is now owned by the village. I feel sorry for the leaseholders tied to breweries, they are the ones going out of business ( and usually being sold for housing ).

 

[Northern_Brewer]

I can brew 36p* a pint session ale at the moment, used to be around 25p, I'm expecting it to rise to around 50p a pint.

Harrybrew69 owner of Harrisons Brewery on YT calculated that he was producing at 22p a pint about a month ago, small craft brewer.

It really is extraordinary how the big breweries can reach £7 a pint but then there are shareholders to please, banksters to pay off and multiple middle men including HMRC skimming all the way along the supply chain.

* not taking into account any capital cost of the equipment, but does include raw ingredients, electricity, cold storage and serving

Doesn't include the cost of your time either. Put it this way - Harrybrew will be selling that beer for at least £1+VAT per pint, and he isn't making a 78% net margin on it, he'll be pushing to break even.

Also - that will be a basic ale, it won't be stuffed full of fancy hops like Nectaron and Galaxy which could easily double the cost of materials.

If it is that all the major brewery’s are getting greedy

Is it the pubs that are getting greedy?

Try neither - pretty much everybody in the industry is clinging on for dear life at the moment. Just look at the latest financials from Carling Marston or Brewdog - barely breaking even or actually losing money. Similar story for operators - they're struggling to get back to 2019 levels of turnover, but costs have gone way up, on everything from wages to energy to CO2 for dispense - and most have Covid-era debt hanging over them as well.

Yes the pubcos are extracting too much rent from the pubs they own, but that's partly a factor of our crazy housing market that means the rent paid by a publican has to compete against the financial benefit from putting some flats on the land.

I'm horrified to read this. Last time I was on your side of the Ditch it was around £4 a pint in Bournemouth/Poole. Looking at the homebrew stores, I don't see massive increases in the price of grain and hops although there have been some grain increases of about 10-15%. Is it all energy costs that are pushing up the prices?
How can Brewers like Marstons and Theakstons still afford to supply the likes of Asda and Tesco with 4 bottles for £6 or whatever it is now?

Well - you've got to compare like with like. That £4 pint in Dorset will only be going to £5 rather than £7 in the near term, but the £7 pints of hop juice in London will have been £5.50 until recently.

The increases in grain are only just starting to come through - see what it's like in January. Energy is a big part of it but it's across the board that things are going up a lot. And the short answer is that those breweries are so desperate for volume that they will be cutting margins to the bone and then some - plus tricks like downgrading quality to hit the numbers, brewing high-gravity and then diluting etc.

Logically, a massive disparity should start to open up between the price of a pint of beer and a pint of cider since there's little energy used and apples, well, grow on trees! I bet it doesn't happen, though.

The flip side is that apples grow on trees - and you can't just put an orchard in your Amazon basket, supply is fixed in the short term. So if demand increases, what happens.... And cider still needs diesel to transport it, CO2 to dispense it (in keg), warmth in the pub to drink it and so on.

But yep, not boiling tonnes of water definitely helps the economics - same can be said of wine in general, although a lot of that is falling foul of Brexit trade barriers instead.

 

[Leon103]

That's a good question.

Sell at volume = not much profit per bottle is needed. We all know some items are sold at lose just to get people through the door.

 

[Leon103]

On energy prices. A pub in town posted their new electric quote.