This Blog is a continuation of How Rising Alcohol Prices Are Shaping the UK Hospitality Scene: What Pub Owners Need to Know
The combined effect of these regulatory changes will be felt directly by consumers. Pub-goers, restaurant patrons, and supermarket shoppers can expect to see higher prices for their favourite drinks in the coming months. As The Guardian reports, alcohol prices are already on the rise, with retailers and bars responding to rising input costs by increasing prices.
While higher prices are never welcome, the hope is that venues can offset some of the impact by offering more affordable or value-driven options. Some venues may introduce promotions or discounts to ease the blow, but others may be forced to scale back their drink offerings or reduce their margins just to stay afloat.
The Bigger Picture: Competitive Challenges for the Industry
In an environment where margins are already tight, rising alcohol prices present significant challenges for businesses. While larger chains may be better positioned to weather the storm, smaller pubs and independent venues may struggle. With rising operating costs and fewer customers spending on alcohol, the competition will become even fiercer.
At the same time, rising alcohol prices create opportunities for rival brands. For instance, during the 2024 holiday season, Guinness faced significant shortages, which led many consumers to explore alternative stouts like Murphy’s and Brennan’s. This shift in consumer behaviour highlights a potential opening for competitors to carve out market share by offering alternatives at a competitive price point.
Primo Drinks Announces Price Increases
One of the latest updates comes from Primo Drinks, a key supplier in the UK hospitality market. Starting from February 3, 2025, several major brands under Primo Drinks, including Bacardi, Heineken, Brewdog, and Diageo GB, will raise their prices. These price increases are part of a broader industry-wide trend as brand owners face rising production costs, such as the new alcohol duty hikes and the Extended Producer Responsibility (EPR) scheme coming into effect in April 2025.
Gavin Wright, the managing director of Primo Drinks, has been transparent about these increases, stating that we do not influence the price hikes set by brand owners or the government. As the company explains, these increases will need to be passed on to customers. With multiple suppliers, including industry giants like Asahi UK, Carlsberg Marstons, and Pernod Ricard Spirits, all raising their prices by February 2025, venues across the country will need to adapt quickly to manage these changes.
Why Are Prices Going Up?
Multiple factors are driving these increases. First, the upcoming alcohol duty rise, effective from February 1, 2025, will impact the cost of alcohol across the board. This increase, combined with the new EPR scheme aimed at improving recycling efforts, means that packaging, particularly glass bottles, could see an additional charge, increasing costs for both producers and wholesalers.
Heineken and other major brands have already confirmed price hikes, with increases expected to affect a wide range of products, from beer and spirits to soft drinks. For instance, Primo Drinks is passing on these price hikes for numerous suppliers, such as C&C Brands, Accolade Wines, and AG Barr Soft Drinks, starting in early February.
How Will These Changes Affect Your Venue?
For venues, the impact is twofold. Not only will they face higher wholesale prices, but they will also need to manage the inevitable ripple effect of those costs being passed down to the consumer. While many larger venues might be able to absorb some of the costs or shift their pricing structure, smaller pubs and independent bars may struggle more with these increases. Additionally, the price of non-alcoholic drinks will also rise due to price increases by major soft drink suppliers like Coca-Cola Enterprises and KP Snacks.
Many in the industry, including suppliers like Primo Drinks, are working to minimise the effects on customers. However, businesses will still need to find innovative ways to maintain profitability while balancing the higher costs that will inevitably come from these price increases.
What Does This Mean for Your Venue?
If you’re a pub or restaurant owner, these regulatory changes are something to keep a close eye on. With rising alcohol duties and packaging costs, it will be essential to adjust your pricing and supply chain strategies accordingly. Here are some tips to consider:
- Stay Ahead of Price Increases: Be proactive in assessing how these changes will impact your costs and plan for price adjustments well in advance.
- Focus on Value: In an environment where consumers are more price-conscious, offering value-driven options, such as happy hours or package deals, could help retain customers.
- Explore Non-Alcoholic Options: With growing demand for non-alcoholic drinks, diversifying your drink menu could help cater to the health-conscious consumer while offering more affordable options.
While the perfect storm of rising alcohol prices may be unavoidable, it doesn’t mean your business can’t navigate through it successfully. By staying informed, being flexible, and responding strategically, you’ll be in the best position to weather the storm and continue to thrive in a competitive market.
Stay Agile, and Don’t Overlook the Numbers
As a pub owner, staying informed and agile is key to surviving—and thriving—amid rising alcohol prices. By understanding the full scope of price changes, proactively adjusting your inventory, and diversifying your suppliers, you can continue to offer high-quality drinks without compromising profitability.
The drinks industry in 2025 is undergoing a significant shift, but with careful planning and strategic decision-making, your venue can weather the storm and emerge stronger.
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