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Pubs may pass on wine price rises

10 April 2008 by
Pubs may pass on wine price rises

Pub and restaurant operators are experiencing a squeeze on wine margins because of the unfavourable pound-to-euro exchange rate, a poor vintage in 2007 and the chancellor's tax hikes on alcohol in the Budget.

With the chancellor slapping 14p per bottle in extra tax on wine last month, operators predict that they will have to pass the increases on to customers at a time when falling consumer spend and the first winter of the smoking ban in England is hitting the licensed trade hard.

Jo Eames, co-owner at Caterer Adopted Business Peach Pub Company, said an average bottle of wine, sold in a pub or restaurant for £12 or £13, was facing a £1.75-per-bottle price increase if operators wished to maintain existing margins.

"We've always worked to over-deliver on the quality for the price point but we're having to work hard to find the wine we want at the price we want to do it at," she said.

"When we're hit with so many cost increases, including on food, it's not as if we can't pass these costs on."

Eames added that customers would have to get used to higher prices on wine because they were "going to see it everywhere".

Jonathon Swaine, general manager of quality managed pubs at Fuller Smith & Turner, agreed. "We've seen the cost of inflation in pubs up by 6% for wine across the board. We're just glad we have our own wine agency. I wouldn't want to be selling wines that are familiar to customers through supermarkets. We're going to have to look at our margins with the 14p tax rise."

Michael Prior, wines and spirits manager at Todd's, the wine and spirits division of Shepherd Neame, said: "France and Italy had the most appalling vintage and that has led to price increases of about 20%.

"We're trying to be as firm as possible with our suppliers but they're having their own issues about paying for utility bills, fuel and even cork costs. They're all affected by the increase in costs."

Read more on wine at www.caterersearch/wine

Rising food costs herald the end of mid-market restaurant boom >>

More high profile pub failures predicted >>

By Christopher Walton

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