70% of pubs could shut down due to soaring energy costs

24 August 2022

Soaring energy costs, a shortage of kegs, cans and CO2, as well as increasing prices of grain are putting thousands of the UK’s pubs at risk of closure. 

A survey by the Morning Advisor found seven in 10 pubs say they may have to close their doors if there is no government intervention on energy costs. 

Over 65% of pubs surveyed reported utility costs rising more than 100%, while 30% reported a 200% increase, and almost one in ten (8%) said they had experienced increases of over 500%. Almost 80% of all respondents said they could not afford the rise in energy costs.

There were 46,350 pubs in the UK in 2021, according to the British Beer and Pub Association (BBPA), with around half (23,000) of these being independents. 

The BBPA, UK Hospitality, Night-Time Industries Association, Music Venue Trust and The British Institute of Innkeeping also wrote to the government last week to warn that “rocketing energy prices [were] a matter of existential emergency”.

Emma McClarkin, chief executive of the BBPA added: “Rising energy bills are putting pubs in real jeopardy. Sudden, extreme price hikes are already forcing publicans to make tough choices, from reducing opening hours to cutting options on their menus. 

“We are experiencing a perfect storm that is not only shrinking but eradicating profitability margins. We urgently need an energy price cap for small businesses before extortionate bills cripple pubs and we lose them forever in communities across the country.”

Meanwhile, smaller and independent breweries are also at risk due to the same pressures.   

The Society of Independent Brewers (SIBA) and the Campaign for Real Ale (CamRA) have written to UK chancellor Nadhim Zahawi to warn that UK brewers will be forced to shut down without government intervention.

The trade bodies wrote: “We have entered one of the most challenging times for the brewing sector, which is facing the combined impact of energy cost increases, regular shortages and a cost-of-living crisis. Small brewers are reporting that their energy bills are doubling or trebling, putting their future ability to brew at risk.”

They said the energy cost crisis is further being compounded by shortages of equipment such as kegs, CO2 and cans as well as increasing costs of raw ingredients including grain, which has seen its prices skyrocket following a global shortage due to Russia’s war in Ukraine. 

Additionally, recent droughts across Europe are exacerbating issues, with Europe's hop harvests expected to yield 20-40% less than last year, leading to “higher prices and shortages in the months ahead”. 

The brewing industry was among the worst hit by the Covid pandemic, the trade bodies wrote, with 160 brewers being forced to close down and a further 40-60 small brewers closing in 2022 so far. They claimed that small brewers came out of lockdowns with an average of £30,000 debt. 

Finally, they called on the government to introduce an energy price cap for businesses – similar to those in place for domestic customers – as well as greater support for organisations to switch to renewable energy sources.

Nik Antona, chair of CamRA said: “Pubs-goers and beer drinkers want to see urgent action from the government to make sure the UK’s best beers, brands and breweries can survive these unprecedented times of rocketing energy and ingredient costs and a dip in consumer confidence.

“With businesses having pulled out all the stops to make it through the pandemic, it would be a travesty if more of our local, small and independent breweries were forced to close for good now due to the crisis with the cost of energy, goods, and doing business.” 

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