Energy crisis: pub and brewery bosses warn of mass pub closures as bills rise by 300%

Pubs and breweries have warned of mass closures due to spiralling energy costs and inflationary pressures.

The bosses of six of the UK’s largest chains, including Greene King and Carlsberg Marston’s, have sounded the alarm in a major intervention today (30 August).

It follows recent warnings reported in pub trade magazine The Morning Advertiser that the UK is set to lose more than half of its pubs and bars as a result of the energy crisis.

What have pubs and brewers said?

In an open letter to the government, the bosses of Greene King, JW Lees, Carlsberg Marston’s, Admiral Taverns, Drake & Morgan and St Austell Brewery have issued dire warnings about what the cost of energy is doing to their businesses.

Energy prices have rocketed since 2021, initially as a result of high demand from economies that were reopening after Covid lockdowns but more recently due to the Russia-Ukraine war.

The situation looks set to get worse as the conflict continues and France - a major supplier of energy in Europe - struggles with faults in its nuclear reactors.

Unlike domestic energy supplies, business energy bills are not governed by an Ofgem price cap.

It has left some pub owners with bills that have quadrupled.

Others are struggling to even find suppliers willing to power their venues when their power contracts come up for renewal.

“We have publicans who are experiencing 300% plus increases in energy costs and some energy companies are refusing to even quote for supply,” said William Lees Jones, managing director of the JW Lees pub group.

“In some instances, tenants are giving us notice since their businesses do not stack up with energy at these costs.

“These are not just pubs but people’s homes and the hearts of the communities that they sit in.

“Government needs to extend the energy cap to business as well as households.”

Nick Mackenzie, CEO of 2,700-strong group Greene King, said one of his firm’s tenants had seen their energy bill climb £33,000 for the year.

“While the Government has introduced measures to help households cope with this spike in prices, businesses are having to face this alone, and it is only going to get worse come the autumn,” Mr Mackenzie said.

“Without immediate government intervention to support the sector, we could face the prospect of pubs being unable to pay their bills, jobs being lost and beloved locals across the country forced to close their doors.

“[It would mean] all the good work done to keep pubs open during the pandemic could be wasted.”

Pubs and brewers are the latest businesses to call on the government to introduce a business price cap.

Earlier in August, the Association of Convenience Stores (ACS) - a trade organisation representing local grocery retailers - warned of a worst-case scenario where some businesses are forced to close unless a price cap “in line” with the domestic one is introduced for businesses.

The best case scenario would “include cancelled investments, reduced staff hours and increased prices in stores, pushing up inflation even further,” said ACS CEO James Lowman.

A government spokesperson said: “No government can control the global factors pushing up the price of energy and other business costs, but we will continue to support the hospitality sector in navigating the months ahead.

“That includes providing a 50% business rates relief for businesses across the UK, freezing alcohol duty rates on beer, cider, wine and spirits and reducing employer national insurance.

“This is in addition to the billions in grants and loans offered throughout the pandemic.”

Energy crisis threatens CO2 supplies

As well as facing soaring energy costs, an additional implication of the energy crisis has been yet another threat to CO2 supplies.

On 24 August, the UK’s only major carbon dioxide supplier CF Fertilisers announced it would temporarily shut down its plant at Billingham, County Durham due to the price of power.

“At current natural gas and carbon prices, CF Fertilisers UK’s ammonia production is uneconomical, with marginal costs above £2,000 per tonne and global ammonia prices at about half that level,” a statement from the firm read.

“The company has notified customers who purchase carbon dioxide (CO2) on a contract basis from the Billingham Complex about the impending temporary halt of ammonia production.”

Carbon dioxide is produced as a by-product of fertiliser production, which is itself an energy-intensive process.

This CO2 is then sold on to many businesses, including the food and drink sector which uses it to make fizzy drinks - like beer - extend the shelf-life of fresh products, and humanely kill animals destined for consumption as meat.

In 2021, products, including sausages, temporarily disappeared off shelves due to the closure of CF’s plant when energy prices soared.

A last-minute deal brokered by the government in January 2022 prevented a similar outcome.

However, CF looks set to close its plant in the coming weeks unless the government steps in again.

Emma McClarkin, chief executive of the British Beer and Pub Association (BBPA), said: “This rise in energy costs will cause more damage to our industry than the pandemic did if nothing is done in the next few weeks.

“There are pubs that weathered the storm of the past two years that now face closure because of rocketing energy bills for both them and their customers.”

Additional reporting by PA