The drinks trade has urged the government to protect producers and retailers, as they brace for soaring energy prices.
Between February 2021 and August 2022, The Federation of Small Businesses (FSB) has estimated that bills have risen by 349% for electricity, Similarly, gas bills have risen approximately 424% during the same period.
Phil Innes, founder and director at Loki Wine, said he has seen energy prices “quadruple in a quarter”. He said: “We have had to accept a fixed rate that usually we would never have fixed on, but unfortunately it was better than continuingly escalating prices. So we are currently paying double what we were previously over 3 years ago.”
John Chapman, managing director of The Oxford Wine Company, said the retailer also opted for a fixed rate. However, he explained that fixed rates only stagger the problem.
“Currently we are experiencing about a 65-70% increase in spending with more to come,” he warned.
“There is only so much one can do to minimise energy wastage and I believe most businesses will be adding this additional cost to the bottom line of their product. In most cases up to now we have absorbed the costs preferring to work harder on procurement to maintain our pricing – but there will be a limit.”
In the beer industry, the British Beer & Pub Association has issued a warning of closures amid energy bill rises.
Paul Davies, chief executive officer of CarlsbergMarstons, said the price hikes, coupled with a approximately 50% rise in aluminium costs for cans, has left the brewing industry in a “crisis far graver than that which we faced during the Covid lockdowns of the past few years.”
He continued: “We have seen surging commodity prices and a doubling in the cost of malt, as well as C02, gas and energy costs nearly tripling since 2019.”
With drinks retailers feeling the pinch, the Association of Convenience Stores (ACS) has written a letter to the Chancellor. It has urged the government to take action to deal with the “spiralling cost of energy” which is expected to cost convenience stores across the UK around £2.5 bn this year.
ACS chief executive James Lowman said the price hikes will leave “thousands” of convenience stores forced to make “extremely difficult decisions…which at best will include cancelled investments, reduced staff hours and increased prices in stores, pushing up inflation even further”.
He also said that the cost of energy could make “the business unviable” for some convenience stores, meaning that they will be forced to close.
The organisation noted that the government is currently offering a 50% reduction in their business rates bill through to the end of the 2022/23 financial year, but pressed for further support.
The ACS encouraged the government to introduce a price cap on energy for small businesses in line with the cap that is already in place in the domestic market, and to scrap business rates bills for all convenience stores from October 1 until the end of the financial year.
Looking ahead to the next financial year, the ACS called on the government to freeze the business rates multiplier to prevent a “massive increase in rates bills”.