A local independent brewery owner has warned profit margins are constantly shrinking as businesses are forced to absorb spiralling supply chain costs.
Dom Hope-Smith, director of independent local business Carnival Brewing Company, told the ECHO earlier this year that the cost of living crisis has driven up energy and production costs. And just this week Brewgooder chief executive Alan Mahon warned that the price of raw ingredients, such as wheat and barley, were rising faster than the rate of inflation.
Mr Mahon told the BBC energy prices had soared to "eye-watering levels", adding that carbon dioxide was now costing 3,000% more than it did this time last year. He called the energy crisis "a greater long-term challenge than that created by rolling covid lockdowns."
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He added: "The pressures on the industry with cost price inflation challenges and the chancellor's scrapping of the alcohol duty freeze might make a £7 pint the norm rather than the exception in many places."
Last year the ECHO reported Liverpool saw the cost of a price surge by 20% since the pandemic began. Data showed the pint of lager increased from an average of £3.30 to £3.95. And earlier this year, research by consultancy firm CGA also found the average price of a pint was £3.95, although there was considerable variation around the country.
Mr Hope-Smith told the ECHO he thinks there is some nuance to Mr Mahon's price hike prediction. But he admits the hospitality industry is "having to absorb costs from our supply chain" which risks prices being driven up. He added: "We're seeing our profit margins shrinking continually every few months."
Carnival Brewing Company is experiencing similar price hikes as every business around the country. The rise in CO2 costs have risen at an alarming rate - and the business' current fixed tariff ends on October 31. Mr Hope-Smith told the ECHO he is looking to lock in a new tariff but prices currently stand at around four times the current rate. The most surprising hike has seen the price of caustic soda - a cleaning product used in barrels and kegs rise by 300%.
Mr Hope-Smith said the concerns raised by Mr Mahon "ring true with all of us". And he warned it would be the small businesses at risk of closure if the price hikes continue.
He said: "Can a pub survive if the pint goes up that much? It will be businesses like ours that go first. If you lose the independent breweries you lose the innovators - that will be lost.
"But it will be like a domino effect. Everyone will be affected by it. No one wins - it will be just who the survivor."
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