Pubcos absorb brewers' price hikes

Major pub companies are pulling out the stops to help struggling licensees by absorbing the price hikes from brewers.

Admiral Taverns and Punch Taverns have revealed they will not pass on the wholesale price increases announced by InBev, Carlsberg, Coors and Marston's.

From Monday (September 29) prices on lagers brewed by Coors, such as Carling and Grolsch, will increase by 3p per pint. Carlsberg brands will increase by 2.3 per cent from October 6. And earlier this month InBev, brewers of Stella Artois and Beck's, put up prices by 3.3 per cent.

The increases equate on average to an extra 3-4p per pint on the wholesale price of beer.

But in a letter to licensees, Admiral Taverns - the third largest tenanted and leased pubco in the UK with 2,700 pubs - said it would freeze prices until the end of the year and possibly beyond.

Lynne D'Arcy, joint managing director, said: "It's a very bold move and I hope it's appreciated. We don't just pay lip service to helping our tenants, we try and do something meaningful.

"We don't think people would be able to afford it if we were to pass it on in the current environment. I don't think they need any more bad news."

Commercial manager Simon Eyles said the company would be incurring extraordinary cost increases on behalf of licensees as a result of what was, for many of the brewers, the third price increase this year.

"We will monitor market conditions and the trading circumstances of our publicans and review the situation on an ongoing basis," he added.

Punch Taverns said it also had no plans to increase the wholesale prices of its products. A spokeswoman said: "We will continue to endeavor to mitigate brand owners' price increases wherever possible."

Punch also revealed that it is trialing a discount scheme in which licensees can choose a selection of drinks on which to cut prices.

Meanwhile, Enterprise Inns said there were no plans to increase its prices until next February.

However, some freeholders have reacted angrily, claiming that pub company tenants could now have an unfair advantage.

Adam Giles, licensee of the Punchbowl Inn, Bridgnorth, Shropshire said: "It's frustrating that the big boys in the industry can dominate the market so that freeholders like us don't really count. Absorbing the prices does give their pubs an unfair advantage, but we are all in turbulent times."

The rising cost of brewing

• InBev UK increased its wholesale prices by 3.3 per cent on September 15

• Coors will increase its wholesale prices by 3p on every pint today (September 29)

• Carlsberg UK will increase its wholesale prices by 2.3 per cent on October 6

• Food inflation has risen to 13.7 per cent, the highest price since records began 11 years ago

• Inflation on the price of meat has risen to 16.3 per cent

• Inflation on the price of bread and cereals has risen to 15.9 per cent