Brewers mull over duty question

Brewers expect to become embroiled in tough discussions in the comng weeks to determine how much of the Chancellor's 4p a pint beer duty hike will be passed on to customers.

The 4p increase came in at the beginning of this week and those with retail operations will be considering the financial impact of passing on the rise to their tenants. Larger national brewers will meanwhile be preparing to square up to their off-trade clientele.

Stephen Gould, managing director of Leicester-based brewer Everards, said that passing the complete rise in beer duty onto its tenants would be too much of a burden.

"We have decided to increase the price of our own ales for our own tenants by just two per cent," Gould said. This was not part of the duty rise, he added, rather it related to elements such as increasing raw material costs.

Gould said: "We have taken this decision for much wider reasons than the Chancellor's Budget announcement, unwelcome as that was.

"It has clearly been a very tough autumn and winter trading period for all licensees and we know that our licensees are experiencing above inflation price increases for raw materials (food) and with utilities."

Over the course of the year the financial hit to Everards is likely to come in at close to six figures, he added.

Herefordshire's Wye Valley Brewery also said it would not be passing on the increase, which equates to around £8 a barrel of beer, following the Budget.

"We will endeavour to hold our prices for as long as possible," said managing director Vernon Amor.

"Brewers have faced unprecedented rises in the cost of malt, hops and fuel already this year. As a result of these input costs we had to put a price rise through in January, and at the time we made a commitment to try and hold these prices after the Budget so long as the Chancellor didn't do anything outrageous."

Chris Holmes, chairman of Nottingham's Castle Rock Brewery said his company's decision to absorb the duty increase on its own beers for the next six months was designed to help its tenants.

"In the light of the current trading environment and with costs rising all over the place, we felt we had to do our bit for our people." The move would cost the brewer between £12,000 and £14,000, he said.

Meanwhile national brewers face a battle to pass on the increase with the off-trade. Supermarkets are unlikely to want to shoulder the duty rise and one national brewer said it anticipated some "tough discussions" with supermarket groups in the coming weeks.

Others were more forthright. "We can't afford to absorb the duty increase in last week's budget and we will be passing the duty increase on to customers at cost," said Paul Hegarty, head of communications at Coors UK.