PUBLICANS HAVE SAID that news that Diageo are set to increase the price of its beers by 4 cent from next month is “hugely unfortunate” for the industry.
The timing of the increase has been criticised, with one publican telling The Journal that if prices continue to rise, publicans will be forced to close their doors.
The increase was announced yesterday, with the company putting the rise down to rising costs.
“We continue to experience rising input costs across our business operations in Ireland,” a spokesperson told The Journal yesterday.
“We are working to manage and absorb much of this, but to maintain a sustainable business, we have written to our customers in the on-trade to advise them of an increase on draught beer list prices of 4 cent per pint.”
The price change will be applied across the whole Diageo draught beer range and will take effect from 14 August.
The move has been criticised by publicans across the country, with many saying that they will have to pass the price increase onto customers.
Joe Sheridan owns Walsh’s Bar in Dunmore, Co Galway. Speaking to The Journal, the Galway county councillor said the increase is “unfortunate to say the least”.
“The increment comes in the middle of our tourist season and it has an effect on consumer confidence and an effect on tourism confidence. Normally these kind of increments would happen in the latter end of the year around the budget or post-budget” he said.
“The last increment would have been on the foot of increasing grain prices and energy prices, keeping a hold of what was increasing input prices for the breweries.
“In a lot of the cases, those prices have actually come down, so it’s kind of leaving us a little dumbstruck to be honest.”
In Sheridan’s pub, the price of a pint is €4.95. He said the pub didn’t pass the cost onto customers after the last price increase, but will have to pass it on this time.
“Because we didn’t go up the last time, it’ll probably go up maybe 10 cent. Other publicans would have incremented on the last increase, so their increment may only be slight, but if you’re in the city, it could be anything. Maybe 20 cent or 30 cent depending on your circumstances.”
According to Sheridan, the rising costs is having an impact on the trade in rural Ireland. For many people living in his area, Sheridan said that the pub is “the last bastion” for them, adding that the area is “devoid of any services”.
The pub is the cobweb that holds the community together and if we maintain and keep seeing an undermining of that service, the people that are in it for generations will get out.
“Multiple people that I know that have been in the pub game for years and years – generations – and they have closed their pubs and the next generation won’t take it up.
“They don’t see a future in it because at every corner they take, they’re being undermined by excessive tax, increments in price, energy costs, an incremented minimum wage. In a lot of cases, most rural publicans would be working for less than minimum wage.
“There is this perception from the customer that when they hand over the price for a pint that the money for the price of the pint goes in the publican’s pocket, but that’s not the case. It’s less than €1.”
Sheridan said he hopes that “common sense would prevail” and that there will not be more price increases coming down the line from other suppliers.
“In the majority of cases it will be passed on to the consumer, which we as publicans would rather not do because we understand it’s tight for a lot of people out there.
“People go to the pub to forget their woes and their troubles and they don’t need an extra lump put on them there. I think it’s hugely unfortunate.”
Ronan Lynch is the owner of The Swan Bar on Aungier Street in Dublin. He told The Journal that the increase is “hugely unwelcome”.
“We don’t need it. People are under a lot of pressure. You have interest rates rising, you have utility rates going up, you’ve staff costs going up. I think everyone’s very disappointed with it,” he said.
“The scale of the increases is totally mad. We have had unprecedented rises in the last 15 or 20 months from breweries and everyone is just really disappointed with it. It’s not good for the trade, it makes Dublin an expensive place to come and that’s not good.”
Lynch said his customers are “disgusted” by the news. “They’re very, very upset about it,” he said.
“It’s another reason not to go to the pub and we don’t need that. We had Covid, which was a very, very trying time. We didn’t get an opportunity to trade for basically the guts of nearly two years and that’s still lingering there.
“We still have mortgages to pay which are costing more now, we still have legacy debts from Covid that have to be paid. Business has been good, but we need to make up a lot of ground from being closed for nearly 500 days.”
A pint at The Swan currently costs €6.40. Lynch said the pub hasn’t decided whether to pass the cost on to customers, but that it’s likely.
“We need to look at the costs and see where we’re gonna go, but we’ll probably have to push it on unfortunately.”
He added that he does not want to see further increases in the future.
Michael O’Donovan, who owns The Castle Inn pub in Cork city, told The Journal that he had accepted that Diageo’s 12 cent price rise in February would be for the whole year.
“To get this second price increase six months later was just a huge shock,” he said.
“[Diageo's] normal price increase is 4 cent or 6 cent, but having a 12 cent and a 4 cent increase in the same calendar year is unprecedented.”
He also criticised the timing of the price hike. “Some of my colleagues that are in real tourist areas only have 10 or 12 weeks of the year to make money and now this on top of it just not what consumers need with mortgage increases and the cost of living crisis. This is another unwelcome increase that we feel is unnecessary at this time.”
O’Donovan said a pint of Guinness in his pub costs €5.70 at the moment, and while he is planning to look at costs this weekend, he feels he may be able to absorb the cost this time.
“My initial initial reaction is I think consumers, our customers, are already stretched so in the back of my head, I’m thinking at the moment that I’d like to absorb this one, but I have to do the sums because it’s easy to say I’ll absorb it, but it might not be financially viable to do that.”
O’Donovan said the combined increase of wages, supplier costs and electricity and gas bills is making it very difficult to run a business.
“While we welcome that energy prices have come down in the last six to eight weeks slightly, it’s still at an all time high. It’s probably 50% higher than what it was in 2019,” he said.
Looking ahead to the winter, O’Donovan said that if energy prices stay as high as they are, publicans will need assistance from the Government. Otherwise, “businesses will not survive next winter”.
It’s a fight to survive. People say publicans are ripping people off and making a fortune, but every couple of months, there’s another pub closing.
“If publicans were making that much money, and it was such a viable business, we wouldn’t have seen the closures that we’ve seen in the last 18 months as we’ve come out of Covid. Pubs are doing good, but they’re surviving. I don’t think anybody is making a fortune or making vast sums in the industry at the moment.”
Asked about the possibility of future increases, O’Donovan said: “We’ve seen 16-17 cent increases which have been almost double what we’ve ever seen before, so I don’t think our industry can take any more increases in the foreseeable future.
“If there is more increases, it’s inevitable that pubs won’t survive.”
According to a Drinks Industry Group of Ireland report published last September, Ireland has the second highest overall rate of excise duty on alcohol as well as the second highest on beer.
O’Donovan said a Government intervention to reduce excise duty on alcohol in the upcoming budget would have a positive impact on the hospitality industry as a whole.
“A reduction in the excise would be a huge step forward and it would be felt by everybody. That would be a big call that we’d be making to the Government right now.”
In a statement to The Journal, a spokesperson for the Department of Finance said: “Any change to excise Duty would be a Budgetary matter. As such we cannot make any comment.”
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