Britain’s oldest brewer, Shepherd Neame, has announced it will raise its beer prices in response to the increased taxes and wage costs set to take effect this April. The brewery, which operates 290 pubs predominantly in the South East, estimates that the two Government policies unveiled last year will add approximately £2.6 million annually to its expenses.
“We plan to mitigate the majority of these costs over the next 18 months through price increases and cost efficiencies,” declared CEO Jonathan Neame on Wednesday. Chancellor Rachel Reeves had previously introduced a hike in employer National Insurance contributions during the October Budget, alongside an increase in the minimum wage. The upcoming NICS rise is intended to bolster funding for public services like the NHS.
However, some businesses have voiced concerns that the policy could make hiring more costly, with the hospitality sector, employing many lower-wage workers, expected to feel the impact acutely. Mr Neame, who oversees a workforce of about 1,600, characterised the current market conditions as “challenging”. Despite the unwelcome additional costs, he expressed confidence in the company’s ability to adapt: “The additional costs imposed on our sector are most unwelcome, but the business model is flexible, and we can adapt to the new circumstances.”
He also highlighted the strength of their pub estate and the evolution of their beer business to align with contemporary consumer preferences.
Shepherd Neame is the UK’s oldest brewery, with a history spanning over three centuries. It produces a variety of beers, including well-known brands such as Spitfire, Bishops Finger, and Whitstable Bay.
Total beer volumes at the company took a hit, plunging 12.6% in the second half of 2024 compared to the same period in the previous year. Revenue dipped slightly to £85 million, as an “increase in pub sales and a decrease in sales from premium bottled ales” were reported.
However, there was a silver lining as underlying profit soared nearly 10% to £4.2 million, thanks to a drop in inflation last year. Mr Neame reflected on the year’s trading patterns: “We enjoyed buoyant summer trade in July and August, with consumer and business confidence high.”
He said: “During the autumn, confidence evaporated in the run-up to the Budget. Since then, activity picked up again and we enjoyed record Christmas trading, with good growth on 2023, with many individual pub records exceeded.”
He commented on the impact of rising labour costs, saying it has “undermined business and consumer confidence in the short term”. Yet, he remains optimistic about the future, expressing hope “hopeful that the economy will return to a growth trajectory, with net disposable income growing and interest rates falling”.
