Brewing giant to hike pub prices in weeks in fresh blow for drinkers
A MAJOR brewer will hike the price of its draught beer by an average of 2.97% for pubs from next month in a blow to drinkers.
Heineken said the changes will come into force on all deliveries from February 1, 2025.
The price increase could affect the cost of beers on tap such as Birra Moretti, Heineken, Fosters and Tiger.
The hike in the wholesale cost of beer could be passed on to customers if pubs, already under-pressure, cannot absorb the additional costs themselves.
It could mean chains such as Stonegate and Whitbread are forced to push up their prices.
It is up to individual pubs and chains to decide if they will put up prices, and if so by how much.
Heineken will also increase the cost of its wholesale packaged products by an average of 2.5%.
This could include bottled beers such as Desperados and Amstel.
The brewery giant said it has made “considerable efforts” across the business to “deliver cost savings and drive efficiencies” in 2024.
This was an attempt to try to “reduce the impact of inflation” for its customers.
But Heineken said changes to Government legislation around packaging that are set to come into force this year will cause “significant cost increases” for the company.
At the start of last year the brewing giant increased the wholesale price of all its keg beers by by 1.73%.
At the same time it also reduced the ABV of its top-selling John Smith’s Extra Smooth from 3.6% ABV to 3.4% at the same time
This year’s price hike also comes at the same time as a drop in alcohol level for a popular brand.
The brewer has said it will reduce the strength of its SOL brand drinks from 4.2% to 3.4%.
Heineken said the reformulated beer will be in production from February 25 and its wholesale price will be cut from this date.
A Heineken spokesperson said: “As ever, we continue to make considerable effort across the business to deliver cost savings and drive efficiencies to keep price increases to a minimum, and reduce the impact of inflation on our customers.
What is happening in the hospitality industry?
By Laura McGuire, consumer reporter
MANY Food and drink chains have been struggling in recently as the cost of living has led to fewer people spending on eating out.
Businesses had been struggling to bounce back after the pandemic, only to be hit with soaring energy bills and inflation.
Multiple chains have been affected, resulting in big-name brands like Wetherspoons and Frankie & Benny’s closing branches.
Some chains have not survived, Byron Burger fell into administration last year, with owners saying it would result in the loss of over 200 jobs.
Pizza giant, Papa Johns is shutting down 43 of its stores soon.
Tasty, the owner of Wildwood, said it will shut sites as part of major restructuring plans.
“This year, there will be major legislative changes around Extended Producer Responsibility (EPR).”
EPR is a strategy to add all of the estimated environmental costs associated with a product throughout its life cycle to its market price.
The spokesperson added: “The first stage of this is Packaging Recovery Notes (PRN) which increase Heineken UK’s responsibility for the fees from 37% to 100% – a considerable cost increase.
“The retail element of this has been included in the price increase.”
A Packaging Recovery Note (PRN) is a document that proves packaging materials such as glass and aluminium have been recycled or recovered.
Heineken must comply with these rules because it produces packaged goods.
But changes to regulation will mean that Heineken will be responsible for 100% of these fees.
Previously the company was responsible for 37% of these fees, with the rest being spread through the supply chain and retailer.
The British Beer and Pub Association last week called on the UK government to reconsider the crippling costs of the EPR packaging scheme.
The association described the fees as “painful” and said the current estimates risk causing significant financial strain on the industry.
Meanwhile, last year Pev Manners, the managing director of cordial maker Belvoir Farm, said the preliminary cost for glass in the EPR would wipe out the company’s profits.
He said: “Last year, we turned over £21million and made £900,000 profit. My finance director estimates this tax will cost us £850,000 next year, so 100% of our profits.”
TROUBLE FOR BREWERIES
Heineken is not the only brewery to face rising costs and weak consumer spending.
Young’s said it will take an £11million annual hit from rises in employer taxes which were announced in the Budget.
Its chief executive, Simon Dodd, said in November that the increase in employer national insurance contributions and the increase in the national minimum wage would cause “significant increased costs for our industry in the near term”.
Meanwhile, Marston’s raised the price of draught beer across its pubs after the budget tax hikes.
In some areas, drinkers faced price increases of up to 10p per pint.
The company said the decision to raise prices follows increased costs and difficult trading conditions in the UK hospitality industry.
What was announced in the Budget?
IN the budget the government made several big changes which will impact pubs and restaurants.
It increased the rate of employer Class 1 National Insurance contribution rates from 13.8% to 15.0%.
It also reduced the per-employee threshold at which employers become liable to pay National Insurance from April 6, 2025 from £9,100 to £5,000 a year.
Meanwhile, it increased the National Living Wage from £11.44 to £12.21 an hour from April 2025.
All of these changes will increase the cost for pubs, which they may be forced to pass on to customers.
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