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 Friday, 17 January, 2003, 12:05 GMT
Beer prices to rise by 10p a pint
Beer taps
Brewers and publicans are putting up prices
The cost of a pint of beer is expected to rise by 10p, partly because of increasing pension and national insurance costs.

Coors, which has a 21% share of the market with its popular brands Carling, Grolsch and Worthington, has announced a rise of up to 4.7%.

While Wolverhampton & Dudley, maker of Banks's Bitter, Marston's Pedigree and Mansfield, said it was increasing its prices by about 3.5%.

Beer prices are traditionally set in the run up to April, and other brewers are expected to follow suit.

If the UK's 60,000 pubs then pass on the full cost to drinkers, and add an additional charge, it could mean up to an extra 10-15p on the price of a pint.

Who's to blame?

Brewers are blaming increased labour costs for the increase in barrel prices.

Alistair Darby, managing director of Wolverhampton & Dudley brands division, told BBC News Online that his business would incur an extra 2m in labour and business costs this year.

From April 2003, national insurance (NI) contributions will rise by 1% for employers and 1% for employees.

As a large employer with 1,200 staff in its head office and breweries, and as the owner of 500 pubs, with 11,000 bar staff, it has a hefty NI bill.

But it also says pension costs and rising insurance premiums are also adding to the problem.

Paul Hegarty, external communications manager at Coors, echoed Mr Darby's comments.

"It's undeniably true that the government is putting an awful lot of additional costs on businesses," he told BBC News Online.

Landlord charges

While breweries set the barrel price, landlords can charge what they like - and any increase is likely to be matched with a top-up at the pub counter.

Andrew Pring, editor of the Morning Advertiser, a pub trade paper, said: "Generally when they put up the price by 5p the landlord will have to increase his prices too, as his gross profit margin will have been eroded."

The amount breweries charge to pubs over the last ten years has in fact declined by 16%, but breweries say they are often blamed, even when the landlord has added a huge mark-up.

"If we put it up by 3p on a pint, and then the pubs put it up by 15p, they then blame us," said Mr Hegarty.

Lobbying duty rate

The British Beer and Pub Association (BBPA), which represents both sides of the industry, said it was lobbying for duty to be frozen once again by the Chancellor in this year's Budget.

Gordon Brown has not put up beer duty since April 2000, because of the high levels of cheap foreign beer brought into the UK by cross-channel shoppers or illegal smugglers.

But, according to the industry, smuggling is just as prevalent - and causing great misery for honest pub landlords, who refuse to sell on smuggled goods.

"We are grateful for the last freeze in duty, and we are hoping for a freeze this year," said Karen Kelshaw, a BBPA spokeswoman.

See also:

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