Value of beer sales in pubs higher than volume

According to data from CGA, the volume of beer sales per hectolitre in the on-trade saw a 0.6% increase between August 2022 and August 2023, from 17,168,139.2 to 17,262,853.9.

However, sales by value during this period saw a 5.3% upswing, from £12,529.5m to £13,199.8m.

Adnams production director Fergus Fitzgerald told The Morning Advertiser​: “The increase in value shows a huge amount of restraint by brewers and pubs given the much higher increases in the cost of beer production and the cost of running a pub.

“This is reflective of pubs often being at the heart of their communities and the need to make sure they are affordable so that even in times of economic stress people can still come together and share a beer.
“However, this does mean that pubs are operating at much lower levels of profitability, and when many are also dealing with higher borrowing costs in the wake of Covid this puts a lot of pressure on pubs.”

Outrageous increases 

In recent months, the sector has battled rocketing energy costs, a rise in beer duty, inflationary pressures, sky-high food prices and staffing issues.

On top of this, the benefits put in place to support pubs through the continuously challenging economic outlook, for example business rates relief, are set to come to an end early next year.

Co-owner of Cheshire Cat Pubs & Bars, Tim Bird, said: “Any increase in the cost of anything is a challenge to any pub.

“Costs are going up across the business and in the end, they will take their toll even more on less fortunate pubs. It seems like ‘death by a thousand cuts’ at present.

“The big concern for pub operators is that business rates will be returning to the highs of pre-pandemic next April 2024.”

Bird added without tackling “outrageous increases” from national brewers, teamed with the rates increase in April and the recent National Living Wage hike​, many pubs will face “problems” over the next 12-months.

“If a lager brand really wants to stand out in 2024, they should reduce their prices to help the very people they need to sell their lagers.

“Tackling inflation and reducing beer duty would mean we would see [better] deals in the marketplace and that could balance things out for the cost of a pint"

“It is no surprise lager sales are diminishing fast in favour of cask ale”, he continued.

In addition, the operator claimed “no pubs” benefit from duty on beer being held and urged the Government to “reconsider their approach” to VAT on the industry’s food sales in the upcoming Autumn Statement​.

He said: “Only the brewers’ benefit [from beer duty being held] because they annually put their prices up irrespective of market conditions anyway. Their greed is a real issue.

“There is no better time than now to ask Government to re-consider their approach to VAT on our food sales.

“Even if VAT on food went to 15%, rather than the standard 20%, it would be the most amazing help we could ever receive. “

This comes as the latest data from the Office for National Statistics (ONS), released last month, revealed the average cost of a pint of draught lager in a pub increased 12.1% between August 2022 and August 2023, from £4.12 to £4.65.

Draught bitter saw an 8.8% increase during this period, with the average cost of a pint of bitter rising from £3.53 in August 2022 to £3.84 in August 2023. 

Pushing costs 

However, a recent poll by The Morning Advertiser​ found 82% of pubs were selling pints of lager for more than £4, with 40% charging £4 to £4.99.

Just over a third (32%) of respondents charged £5 to £5.99, and 9% sold pints of lager for £6 to £6.99 while 16% of the 528 respondents sold pints for £3 to £3.99, and only 2% charged £2 to £2.99. 1% said they sold pints of lager for £7 to £7.99.

In addition, figures from CGA by NIQ’s Daily Drinks Tracker​ also showed while drinks sales in managed venues have been up compared with 2022 levels in recent months, real-terms growth will continue to be “hard won”.

Licensee of the Tamworth Tap, in Staffordshire, George Greenway, told The Morning Advertiser ​costs were currently so high pubs “can’t absorb” them, resulting in them being “passed down” to consumers.

Greenway stated energy, cost of materials and hourly rates for staff were the three “main ingredients pushing the cost of beer”.

He said: “I can't see [how] overheads can go any higher than they have done, or there can't be as much of a percentage increase as we've experienced in the past 12 months. It’s got to steady.
“Tackling inflation and reducing beer duty would mean we would see [better] deals in the marketplace and that could balance things out for the cost of a pint.”