Sam Smith's: 10p beer rise would hit production

Brewer Sam Smith ruled out beer price increases as a means of boosting pub revenues and chose to cut staff hours to reduce costs, an employment tribunal heard this week.

Company boss Humphrey Smith claimed a 10 pence rise in beer would have hit brewery output and reduced consumption.

Smith was defending his decision to make swingeing cuts in pub staff working hours to offset soaring costs and bring unviable pubs back into line.

The cutback, which saw staff hours in some pubs reduced by half, led to 18 managers being sacked after they refused to implement the brewery's instructions.

Managers Frank and Pam Marshall are suing Smith's for unfair dismissal in a test case which is expected to determine the outcome of similar claims lodged by the other management couples.

Humphrey Smith told the hearing increasing the price of a pint by 10 pence would not have provided a solution.

The price of beer in the company's pubs, which still sells for only £1-40p a pint, had remained stable apart from 20% excise duty increases slapped on the industry by the Government over the past two years.

"Our policy is to retain existing margins when excise duty goes up and we keep a 40% margin on draught beer.

"If we put more on the price it would have hit customers and hit our output. If the price went up production in the brewery and consumption would inevitably come down," he said.

Smith said reducing staff hours to 45 per week was reasonable and workable and had operated in pubs without perceived problems.

He criticised dissenting managers for failing to adopt new working practices and refusing to give the new hours chance to work.

"Its all about managers increasing productivity and re-inventing themselves and to some extent re-energising themselves," Smith told the Sheffield tribunal.

The hearing has now been adjourned and will resume in May when two days have been put aside to conclude the case.