Local pubs feel the pinch but brewery still profits

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Shepherd Neame Brewery has warned that inflationary pressures could result in increased prices in its pubs. Despite this, the brewery reported 8.4% growth in the last six months of 2022, and local affiliated pubs are still struggling to manage the cost-of-living crisis.

Shepherd Neame brewery recently reported that revenue had grown by 8.4 per cent to £85.3million in the six months leading up to Christmas eve, with gross profit before tax at £53.5million. This is a 15.5 per cent increase on the first half of 2022.

However, for Shepherd Neame pubs in Tunbridge Wells, the story is not the same, with profits being “absorbed” by utility bills and businesses trying to keep their “heads above water” amidst the ongoing cost-of-living crisis.

Last year, according to Government data, 32 pubs closed across England each month after being hit by the extreme challenges associated with Covid-19, rising energy costs and inflation.

Teresa Barrett, Landlady of the Shepherd Neame pub, The Black Horse, Camden Road, told the Times: “Utility bills are the biggest thing affecting the pubs at the moment and wholesale prices are getting worse and worse.”

Teresa explained how she now pays £93 a day on gas and electric, almost £34,000 a year, which includes the Government’s top-up.

“I’d say my energy bills have increased by three or four times from last year, which has led us to go to some extreme lengths to cut down on our bills.

“We have started to experiment with the chiller in the cellar by doing lots of temperature checks to see how long we can turn it off without affecting the beer.

“Right now, our cheapest pint is £4.90. Last year, it was £4.70, but we don’t really see the difference.

“I live at the pub and my bills and rent are paid, but I haven’t had a wage for myself since August 2022 because all the profits have been swallowed up by utilities.

“Hopefully in the summer, we can turn the heating off, but right now it’s about keeping our heads above water.”

James Cunningham, Owner of the Camden Arms Hotel, told the Times: “The industry still hasn’t recovered from covid. We have had to tweak our current prices to keep up with the extreme pressures of the energy prices.

“Our cheapest beer right now is £5.30. That’s a 50 pence increase from last year, but we make less margin because all the profit is absorbed by the energy costs.

“Before we were paying between £3,000-£4,000 a month for energy, but now we are paying between £9,500-£10,000 a month.

“It means we have had to close in the afternoons because we don’t have the manpower to operate, and we’ve had to put our food prices up, because that’s gone up, too.”

Nevertheless, the country’s oldest brewery, founded in 1698, has supported its landlords through the events of the last three years by investing in their buildings and pausing their rent payments during the lockdown.

Ms Barrett told the Times: “Shepherd Neame recently gave us a full refurbishment probably costing around £60,000. They also gave us phenomenal support by not charging us rent during the lockdown and easing us back into our payments when we reopened. Without that support, I don’t know if we would’ve survived.

Of the brewery, Mr Cunningham told the Times: “Shepherd Neame are fine to work with and have been very supportive during Covid, so we have no complaints.”

Shepherd Neame is based in Faversham, brewing a range of craft beers including Master Brew, Spitfire, Bishops Finger, and Whitstable Bay. Ironically, Faversham is also the location of the latest Shepherd Neame pub to close.

The Brewery’s Managing Director – Pubs, Jonathon Swaine said: “Our recently published Interim Results show that our company is making good progress.

“Our profit levels have not yet returned to pre-pandemic levels, and we have been impacted by the inflationary surge in the wider economy, with huge increases in food, energy, glass, brewing raw materials, packaging waste and logistics.

“We appreciate that these inflationary pressures are also creating challenges for our licensees and are working with them to offer every support possible to help them preserve the future of their businesses.

“This has been a tough time for anyone in the hospitality sector, but we are now focused on maximising growth potential through delivering our investment and project plans.

“We have an excellent pub estate with considerable potential, well-established brands, a loyal customer base, and a high profile within the individual communities we serve.

“All these factors will stand us in good stead as the cost-of-living crisis eases and the economy returns to growth.”

Beyond Shepherd Neame, other pubs and restaurants around the town have also felt the pinch of tightened purse strings and are making their best efforts to ensure value for the customer, to keep footfall through the door.

Molly Miller, speaking on behalf of One Warwick Park Hotel, near The Pantiles, reiterated this: “We’ve hung back as the price of drinks continues to rise. We have a loyal customer base at both The Brasserie and our hotel bar, and we don’t want to pass that price increase on.

“We will always do our level best to keep going out as affordable as possible.”

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