Speaking about the challenges faced by pubs and brewers as we move into the new year, McClarkin told The Morning Advertiser (The MA) there was “only so much” the Government could keep asking from the sector.
The British Beer & Pub Association (BBPA) chief executive said: “I hate to say it, but I think 2025 is again going to be a challenging year for the beer and pub sector.
“Businesses are under an extreme amount of pressure because they’ve already had to review their business model five, six, seven, eight times over the past five years since the pandemic but I think 2025 is a batten down the hatches moment.
“It’s not through us not trying hard or the consumers not wanting to be there, it’s the onslaught of rising costs from the Government that are really going to bite business.”
McClarkin added the measures announced in the last Budget would add £650m to the cost of doing business for the sector.
She continued: “We are making pleas to the Government for them to understand just how significant the changes are going to be.
“I’m hopeful the love affair with the great British pub will continue, but I am also conscious that businesses will be having to make really tough decisions this year.
“We would love to see a staggering of the cost increases they’ve put through. Any kind of tapering the Government can bring in to allow time for businesses to prepare for them would be great.”
Moreover, McClarkin added she was “concerned” the impact having to keep evolving and investing would have on capex for the sector.
Constant battle
“People are very nervous. They’re having to divert their investment into other areas.
“This Labour Government was supposed to be all about growth and investing, but I don’t know how we’re going to see that transpire with the environment they have set out this year”, she explained.
McClarkin added firms were also unable to properly plan for business rates reformation without knowing what it will entail and implored the Government to provide clarity as soon as possible ahead of April and the spring Budget.
“What is their plan for growth [and for hospitality]? How are they expecting businesses like pubs and brewers in high streets and communities up and down this country to grow in the face of the cost increases we’re seeing?”, she implored.
In addition, the chief executive said firms across the sector were facing a “constant battle” as they try to balance the increasing cost of doing business.
“It’s going to be a tough year and we really need to champion British beer. We need people to support our pubs and brewers, but we also need a tax environment [that encourages growth].
“[Publicans and brewers] are some of highest taxed people in the country. And that is something we’ve got to see come down going forward.
“Breweries are only making pennies on a bottle of beer and pubs only make 12p on a pint of draught beer”, she continued.
McClarkin also told The MA rising employment costs were one of the biggest worries for the sector going into 2025.
She said: “We employ more than 1m people in the beer and pub sector and a lot of those people are under the age of 25.
“We’re a vital cog in local economies and have the machinery to deliver growth”
“We already pay £17bn in wages as a sector and knowing that’s going to increase again is really frustrating.”
In addition, the CEO detailed the challenges faced by and the support needed from the Government was different for pubs and breweries.
She continued: “If we look at business rates, what we need for pubs is long term permanent reformation but that could disproportionately impact brewers because they’re going to increase the taxation on sites over £500K and that will be a lot of larger sites or big distribution sites.
“There’s also the EPR legislation around glass bottles for breweries, which the Government have set new fees for. So, there’s going to be increased fees on bottles, which will then be passed on to the consumer yet again.
“We’re left with very few places to put these extra costs except for pushing prices for consumers, which pushes customers away. We have to square that this year.”
Furthermore, McClarkin told The MA the Government leaving hospitality out of the recent industrial strategy was a “huge oversight”.
“We’re a vital cog in local economies and have the machinery to deliver growth. We can do that very quickly if we are supported, but they didn’t even mention us.
“Pubs and breweries are in every constituency and underpin those local economies and communities.”
Keep the faith
“Not to mention they are a huge tourism asset as well. The top things to do in the UK are got to go the pub and have a pint beer and have some fish and chips; they’re very often the reason why people will go to a certain part of the country or village or town”, the BBPA CEO said.
Despite the huge economic challenges, McClarkin urged operators to “keep the faith” this year and continue investing in their teams to make them feel “secure” and bolster long-term confidence in the sector.
She encouraged: “Do what you do best. Focus on your teams, make sure they feel valued and keep surprising and delighting your customers, giving them more wonderful experiences and more reasons to keep coming back to the pub.
“There’s a lot of nervousness around the industry but I think there is long term confidence in the sector, it’s just going to come with some painful short-term challenges.
“The key is keeping that entrepreneurial spirit by thinking about what the customer wants to get them through your door.
“It doesn’t need to be huge investments; it could be small things like a free portion of chips or anything to make your guests feel that little bit more special.
“Everybody loves the pub, but everybody needs to use the. And if you want them to keep using the pub, they need more reasons to go there.”
