Publicans slam Diageo for price hike

The Vintners’ Federation of Ireland (VFI) has claimed Diageo’s decision to increase the price of its products will put thousands of jobs at risk across the country’s pubs.

Diageo confirmed it had written to its customers informing them of a price increase in draught and other beer products, which will take effect at the end of this month. It would not say how much the increase was and said any increase to the pub customer was a matter for individual pubs.

The drinks giant also said the increase was the first in four years, and had “been kept to a minimum”.

It said it had been necessitated by very significant increases in input costs, with production, operating and raw material costs all doubling since 2009. In particular, it said the price of barley, the key ingredient in beer, had increased by 105%.

“The price increase in beer products will be implemented at a similar level in both the on and off trade, and is significantly less than the inflation rate for food products as measured by the CSO’s wholesale price index,” it said.

Diageo also pointed out that it continues to be one of the largest financial supporters of the pub trade in the Republic, spending €55m each year on a quality programme and other supports for customers, “including local events sponsorship and investment through activation of marketing campaigns and promotional events”.

However, the VFI said the price increase was a disaster for the hospitality industry and for Irish consumers and tourists at a time when pubs were trying to boost consumer confidence, to get people spending “and to reinvigorate a trade already on its knees”.

“This announcement will further dent that confidence,” it said. “Publicans all over Ireland are struggling to keep their doors open and it is inconceivable and desperately disappointing that Diageo has taken this step that will put further pressure on publicans and consumers nationwide.

“Publicans are doing everything within their powers to keep their businesses alive and their staff in jobs and value is essential to this survival.”

It pointed to recent figures from the Drinks Industry Group of Ireland (DIGI) which showed that the on-trade supports more than 54,000 jobs throughout the country but has experienced continued decline throughout 2012 to date, with a year-on-year decline of 8% when compared with this time last year. It said that in 2005 there were 8,617 licenses, in 2011 that was down to 7,509 and now in 2012 there are 7,359 licenses.

“The majority of our members run family businesses and often in areas where there is little other employment,” it said.

“This move will do little for these small businesses. At a time when all those in the drinks industry should be working together keeping pubs open and maintaining employment, this is a unilateral move on Diageo’s part and whether they like it or not, it will cost jobs,” the VFI added.