ITS bad news this Christmas for those who enjoy a festive tipple – the recent drop in the value of the pound means our favourite drinks will be considerably dearer and traders warn that price hikes will inevitably be passed on to the consumer. In some cases that could be 50 a pint.
Since the referendum result in June, the value of the pound against the dollar has dropped by 16 per cent, as the uncertainty of Britain’s economic direction has spooked the currency markets.
And for local pub owners such as Alex Greig of Fuggles Beer Café, on Grosvenor Road the impact has been ‘two-fold’, raising the price of both the ingredients needed to brew in the UK as well as popular beers that are imported from Europe and beyond.
“It has an impact on the ingredients we use. Whilst we grow hops in the UK, the varieties that are in highest demand are imported from Europe and the US. This will at some point be passed on by most breweries to us and then, on to you the customer.
“Aside from that, importing beer has gone up – most of my wholesalers have now used up any cash reserves they had in euros and dollars, meaning they’re now getting much less bang for their buck when it comes to purchasing beer from Europe or the US.”
He points to a recent delivery of beer from the Netherlands, where prices have already gone up by 50p a pint, adding: “That exchange rate is key to the pub and beer industry – until it recovers I’d expect to see increases across the board over the coming months.”
Within this context, it might seem a good opportunity to start buying from domestic breweries. Nationally, Wetherspoon’s Chairman and Brexit campaigner Tim Martin has suggested stocking less European products, but Mr Greig is not convinced of the UK’s current capabilities:
“We could solely buy from UK producers but that’s not really our business model and we’d be missing out on a lot of exciting beer from elsewhere. Ultimately, I also expect a lot of the breweries [from the UK] we work with to increase their prices – they import 95 per cent of their hops, their brewing equipment is often made in Europe and so are the kegs the beer comes in.
“Whilst we could focus on beers also just using English hops the supply and quality isn’t quite there yet so it’s just not a realistic option right now. For example we just don’t have the climate here to grow hops with the same flavour profiles as US imports.”
Despite the incoming price hikes, being located in the affluent Tunbridge Wells means Mr Greig said he is optimistic for the future, as the local economy and employment levels are both ‘strong’. He added: “The pub and beer industry is in a good position at the moment, the demand is there and good brewers, distillers, licensees will all continue to thrive as long as we focus on quality of product and service.”
Despite the upcoming difficulties, co-founder of the Pig & Porter brewery in High Brooms, Robin Wright, argued that ‘it’s not all doom and gloom’, explaining: “Hops may go up but breweries are usually required to contract a large amount of hops at an agreed price for the year ahead so these changes will take time.”
And the news is just as gloomy for wine drinkers
For those who are more partial to a glass of fine wine over a hearty ale, the fall in the pound is equally troubling.
Mike Watson, who founded the Secret Cellar on Church Road in 2005, has said he is already paying 15-20 per cent more to some of his European and American suppliers, although he explains: “Lots of suppliers have been understanding and they’ve made agreements to hold their prices until Christmas. But once the New Year comes there will inevitably be increases.”
His warnings were echoed by the owner of Crowborough-based wine merchants Cork & Keg, Niall Crook, who said while escalations in costs had not been uniform, he had started to see £1-1.50 rises on mid-range (around £12) bottles of wine.
“I think a 10-20 pence increase a year, people can generally swallow. But you’ve got to think once a products begins to hit a 10 per cent increase, you have to start considering if it’s worthwhile to keep stocking it.”
Mr Crook, who also owns The Sun pub in Covent Garden with his brother, explains that the most drastic rises, from the US and France in particular, have only really hit in the last month, as most suppliers hedge their currencies in order to soften the impact of foreign currency fluctuations.
When asked whether he thought the rising cost of foreign wines would continue into the long term, he responded: “Well, I don’t think it’s going to get any better. There’s not going to be an upside to the drop in currency.”