Distributors Matthew Clark and Bibendums announced they are raising prices by 3.5% © David McNew via Getty Images
Distributors Matthew Clark and Bibendums announced they are raising prices by 3.5% © David McNew via Getty Images

Wholesale beer prices to rise as supply disruption persists

21 October 2021

Eight in 10 (81%) pubs have said they will have to raise prices in response to supply chain pressures. 

A poll, conducted by The Morning Advertiser, found out of 189 pubs, only one-fifth (19%) said they did not intend on raising prices in 2021.

The British pub sector has faced ongoing disruptions after shortages of HGV drivers affected pub deliveries, while shortages of CO2 – needed for beer production – have hit the supply chain. 

Distributors Matthew Clark and Bibendums announced they are raising prices by 3.5% in November, citing labour shortages and soaring fuel price as reasons. 

A spokesman for the companies, which are owned by the C&C Group, told The Morning Advertiser: “As our industry recovers from the pandemic, the pressure on UK and global supply chains has added increased costs and complexity.

“This has been further compounded by increased labour costs and fuel price inflation. While we work hard to mitigate the impact of these pressures, in order to be able to maintain the services we provide our customers, we have had to take the decision to increase prices of our products.” 

Emma McClarkin, chief executive of the British Beer & Pub Association, called on the government to cut beer duty and business rates to ease supply chain pressures on pubs.

McClarkin told Supply Management: “Our sector faces a range of cost pressures and rising prices at a critical time in our recovery. It is one of the reasons we are urging the chancellor to support our sector by cutting beer duty, VAT and business rates in the budget next week to ensure our pubs and brewers can remain at the heart of communities up and down the country.”

Price increases are being seen across industries, as Cornetto and Dove owner Unilever announced in its quarterly earnings call it has raised prices by 4.1% due to rises in shipping costs and commodity prices, including palm oil.

Unilever’s chief financial officer Graeme Pitkethly said: “We think that will continue through the end of this year and into next year.”

He continued: “We expect that cost inflation for next year could be higher than this year.”

The warnings over price rises come as the Office for National Statistics reported inflation fell marginally in September, falling to 3.1% from 3.2% in August. 

However, inflation is currently at the highest levels in a decade. 

Bank of England governor Andrew Bailey warned it will “have to act” over inflation in a call to the G30 group of central bankers.

Suren Thiru, head of economics at the British Chambers of Commerce (BCC), warned the slight dip in inflation figures was “temporary”. 

“September’s dip in inflation reflects temporary data distortions rather than the reality on the ground.”

He said the data was distorted as dining out costs have decreased in comparison to September 2020, when prices increased after the eat out to help out scheme came to an end.

“A renewed inflationary surge is expected in the coming months with the increase in the energy price cap, partial reversal of the VAT reductions for hospitality and tourism and persistent supply chain disruption. This is likely to push inflation above 4% by the end of 2021.”

He warned the Bank of England against rising interest rates. 

“While inflation is uncomfortably high, the Bank of England must hold its nerve on interest rates. Raising rates at a time of escalating cost pressures and looming tax rises would severely undermine an already fragile recovery.”

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