The price of a pint of Guinness will climb by about 20 cent within weeks after Diageo rolled out an increase that will take effect early next month.
Publicans said the price increase would “pile yet more pressure on pubs already struggling to survive”. It could see some pubs left with no choice but to call time on their businesses for good, according to the Vintners Federation of Ireland (VFI), an umbrella group representing hundreds of publicans.
Diageo said it was increasing the cost of a pint of Guinness by 7 cent. However, when VAT is added to that and the publicans’ margins are factored in, the price for consumers is likely to climb by 20 cent.
The price of a pint of Guinness 0:0 is to go up by 10 cent, and while the taxes on this product are less than on the regular pint because of the absence of alcohol, the price to consumers will still climb by about 20 cent when other factors and publicans’ margins are added.
In correspondence sent to publicans, Diageo said the price increase would take effect from February 2nd, blaming “industry-wide cost pressures”.
“As industry-wide cost pressures remain elevated, this increase is essential for Diageo to maintain sustainable operations in Ireland,” Diageo said.
The brewer said it remained “committed to support your business and the wider hospitality sector in Ireland, and value your continued partnership”, it added.
The increase is the fifth announced by Guinness over the past three years and will affect all deliveries to pubs after February 2nd.
The VFI said wholesale prices were the single biggest cost facing publicans and noted that the increase comes at a time when margins are already being eroded by rising labour costs, high energy prices and ongoing inflation across all areas of the business.
“Publicans are being hit from all sides, but drink costs are the biggest burden they face,” said the VFI’s chief executive, Pat Crotty.
“This latest price increase from Diageo will put even more pressure on pubs that are already operating on extremely tight margins. Many will be left with no option but to pass this on to customers, which helps nobody,” he continued.
He accepted that suppliers such as Diageo also face rising costs, but said: “There comes a point where pubs simply cannot keep carrying these increases alone.
“Pubs are at the heart of local communities and suppliers depend on them for their route to market. We expect suppliers, including Diageo, to recognise that reality and to support VFI members rather than repeatedly adding to their cost base.”
The VFI warned that repeated supplier price increases are contributing to rural pub closures, where pubs are already under severe pressure from declining footfall and rising operating costs.
Mr Crotty said the problem was not just about the price of a pint. “It’s about the long-term viability of pubs across the country. Community pubs are being pushed to the brink, and continued increases in drink prices only accelerate that trend.”
The VFI repeated its calls on suppliers and the Government to recognise the scale of the challenge facing the sector, and urged the Government to introduce targeted supports to help pubs remain viable.
It wants an excise rebate scheme for draught beer and cider sold in pubs along with measures to ease rising labour costs, including employer PRSI supports.
“Publicans cannot continue to absorb these hits year after year. If suppliers value the role pubs play in Irish life, now is the time to show it through meaningful support,” Mr Crotty concluded. “Without action more pubs will close, and once they’re gone, they’re gone for good.”