Iran conflict might push up the value of a pint in Wetherspoons, Tim Martin fears
The Iran war will push up beer prices, according to JD Wetherspoon chief Sir Tim Martin. The chairman of the 800-pub chain said surging oil prices would ‘soon end up in the price of a pint or a meal in a pub’.
He warned the escalating conflict will push up businesses’ energy bills. Oil prices have jumped from pre-war averages of £55-a-barrel to around £76 prompting fears of a global energy crisis that could push up fuel and manufacturing costs.
Analysts suggest it will heap an extra £169m-a-year on to pubs’ costs when the sector is already struggling with high taxes and red tape. Sir Tim said: “Rising energy costs are bad news for pubs.
“As well as direct increases for gas and electricity they make customers poorer and also push up the costs for suppliers.
“Energy costs soon end up in the price of a pint or a meal in a pub which is not what customers want to hear especially in the current economic environment.”
Last week business leaders warned Energy Secretary Ed Miliband that one in three companies were set to renegotiate energy contracts in April.
Brokers said businesses nearing the end of fixed-rate deals were scrambling to secure cheaper contracts. At the same time suppliers were pulling deals from the market.
Westley Shepherd, of consultant Fidelity Energy, said: “I’m working my way through customers at a rate of knots, trying to get them to do the right thing and move on before prices escalate even more, because the war’s not going to be over in five minutes.”
A consultant who works with some of Britain’s largest pub chains said: “I’ve seen jumps of between 25% and 30% and increases of up to 35% in some hospitality businesses, depending on the size of the venue.”
A typical pub’s energy bill can vary from £650-a-month to £6,000 depending on the size of venue and whether it has a kitchen or letting rooms, according to business comparison site EnergyCosts.
If every boozer’s bill was to rise 30% the sector would face paying £169m-a-year more in energy alone. Unlike homes businesses are not protected by energy regulator Ofgem’s price cap leaving them exposed to changes in wholesale costs.
A spokesman for The British Beer and Pub Association said: “We are in close contact with members to understand the impact any price changes or supply chain disruption could have on their operations.”
Kate Nicholls, of trade body UKHospitality, said: “Hospitality businesses will be closely watching how business energy prices will be impacted by developments in Iran and the Middle East.
“The sector has experienced substantial increases to its cost burden, with energy prices particularly rising over the past four years, and further shocks could be significant for already vulnerable businesses.”
