'Another kick in the teeth' for pub trade as price of Guinness set to increase

Diageo has written to its customers in the on-trade industry to advise them of an increase on its draught Guinness list prices of 12c per pint, exclusive of VAT. File picture

The price of a pint of Guinness is set to rise next month, as Diageo confirmed a hike equivalent to 12c plus Vat on every pint.

The drinks company, which also sells Smithwicks and Hop House 13, said it is facing significant cost inflation across its operation similar to many businesses across the country.

“We have absorbed these costs for as long as possible but unfortunately, we can no longer continue to do so,” it said.

Diageo has written to its customers in the on-trade industry to advise them of an increase on its draught beer list prices of 12c per pint, exclusive of Vat. The price change will be applied across its whole range from 1 February.

It follows the move by Heineken, which also makes Beamish and Murphy’s, in December to hike its prices by 17c a pint due to “exceptional inflationary challenges”. This move was eventually postponed following a backlash from publicans.

Ronan Lynch, the publican of the popular Swan bar in Dublin city centre, said that it comes as “another kick in the teeth for the industry”.

“We know every business is under pressure,” he said. “But it’s price increases we’ve never seen before. First from Heineken, and yet again what’s gone on here with regard to the increase from Diageo is significantly higher than we expected.” 

He said the increase announced by Diageo was double the typical increase publicans would expect, while the previous one from Heineken was almost triple that. Coupled with Vat, and increased staffing costs and energy costs, it may mean a much higher price on the pint than the headline 12c rise.

“It puts a lot of pressure on people operating their business,” he said. 

“And there’s bigger implications too. It’s making Ireland a country more expensive in tourism terms, with hotels already having a significant cost.

If you maintain your existing margin, just to stand still, it’s a 40c increase.

He said that Guinness is a market leader and had sold well in the run-up to Christmas as people thought it was better value than competitors.

“People are being cautious with their spending, thinking of this recession that could be around the corner. They’ll see this and think ‘what is going on here?’,” he said.

Reacting to Diageo’s news, the Vintners Federation of Ireland described it as “very bad news for the pub trade, on the back of energy costs, inflation and threat to [the 9% Vat rate]”.

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Its chief executive Paul Clancy said: “Publicans are getting hammered from every angle at the moment and this news from Diageo is a further blow to the trade.

“We’re heading into the quietest few months of the year for the trade so the increase in the price of a pint couldn’t come at a worse time. Due to the unprecedented cost of doing business, publicans will have to pass on this price increase to their customers, which is something they are very unhappy about.” 

Mr Clancy added that, along with energy costs and the expiration of the 9% Vat rate at the end of February, the trade “can’t keep taking these hits”.

“The VFI is calling on Diageo to reconsider its decision in light of the pressures on the pub trade,” he added.

Taoiseach Leo Varadkar said the 12c increase plus Vat to a price of a pint will add to financial hardships for many pubs.

“I don't think a 12c increase in itself is going to put any pub out of business, but I suppose when combined rising costs, it will cause an actual hardship for many,” he said.

The Taoiseach urged businesses to apply for financial support introduced by the Government to help with energy costs.

He said the Government has been surprised that not many businesses have applied so far, only a couple of thousand.

Mr Varadkar said he believed tens of thousands of businesses, including pubs, would have applied for the scheme and has encouraged people to make a claim which will be backdated to September.

He said the Government will review whether the scheme needs to be extended next month, depending on energy costs.