Rising costs put pubs at risk
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Twin crises are endangering pubs and breweries. Pubs face escalating costs that send the price of beer rocketing and lead to a loss of customers.
The problem and its impact were explained succinctly by Emma Tarbard, the landlady of the Florists Arms in Bethnal Green in London’s East End. She was speaking to BBC London late last month and she said the price of a pint of real ale in her pub had gone up in a few months from £3.25 to £5.
“It’s too dear for a lot of my clientele,” she said. Bethnal Green is an area of London where many people are on low incomes and Emma had noticed her customer numbers fall away at the end of the month while they are waiting for pay cheques or pension payments. Even weekend trade was no longer strong, she added.
She said she was concerned about her older customers, in particular, who were staying away from her pub as a result of high beer prices.
“The pub is their only social life,” she pointed out. This is a societal problem highlighted by a number of surveys in recent years. They found that many older people, especially those living alone, go to the pub not just to drink but to combat loneliness.
Publicans like Emma do their best to keep prices down, but they are faced by a tsunami of soaring costs for electricity and gas along with punitive business rates and VAT.
Breweries have to combat not only high energy costs but also the price of raw materials going through the roof. Charlene Lyons, the chief executive of Black Sheep Brewery in Yorkshire, said she was paying more for malt and hops along with an eye-watering amount of excise duty.
Black Sheep brews 50,000 barrels a year and doesn’t qualify for Small Brewers Relief.
“In 2020 we paid £6m in excise duty – that was when pubs were shut because of Covid,” Charlene says. “In 2022, so far we’ve paid £3m from January to July.”
I asked her how much a pint of Black Sheep Best Bitter costs in York. “£4.50,” she said. That’s almost as much as in London. Is that what’s meant by levelling up?
The mounting price of ingredients has hit one brewery especially hard. Oakham Ales in Peterborough has a wide portfolio of beers but is best known for its Citra golden ale.
Oakham was the first British brewery to use Citra. In 2009 the then head brewer John Bryan was touring hop farms in the Pacific North-west of America when he was shown a new experimental hop “which blew my mind.”
He bought a bale and rushed home to make a new beer with it. Citra was a sensation. It quickly became Oakham’s main brand and many other breweries rushed to use it with its rich and ripe citrus aroma and palate.
But it comes with a hefty price tag. Oakham’s MD Adrian Posnett says he imports 24 tonnes of Citra a year. He can’t use a hop merchant but has to buy direct from American farmers, paying in dollars. With the pound hovering around parity with the dollar, he is worried about the cost of buying Citra, but he can’t run the risk of changing the character of his main beer.
He also pays £1,000 a tonne for Maris Otter. It’s considered by most artisan brewers to be the finest malting barley, but it comes with a hefty price tag.
Switching to different and cheaper malt can cause problems for brewers. Yeast strains that are used to working in harmony with Maris Otter can struggle to ferment beer when they’re confronted by a different variety of malt.
Brewers can cut their costs by using British rather than imported hops. The British Hop Association has busily expanded the number of varieties grown in this country.
There are now 34 British hops and new varieties, such as Harlequin and Olicana, offer some of the citrus notes that brewers are looking for.
In other words, it’s best to stay at home. Given the state of the pound, that’s sound advice.