Price hikes and ‘cost efficiencies’ are on the cards at Britain’s oldest brewer Shepherd Neame as it readies itself for the tax impact of the Autumn Budget.
The pub group behind the Spitfire and Bishop’s Finger brangs said higher employer national insurance contributions and an increase in the national living wage will cost it £2.6million this year.
Shephard Neame had also previously indicated it would incur £1.2million of additional costs in 2025 as a results of logistics changes, but the group now expects costs to be ‘£0.3million higher than this figure’.
The business said it would deliver revenue growth and first half profits in line with expectations and announced it was launching a share buyback programme.
Budget impact: Price rises and ‘cost efficiencies’ are on the cards at Shepherd Neame
The group is buying up and cancelling its ordinary shares up to a maximum of £0.5million in order to boost the earnings and value of its shares.
Shepherd Neame warned of future price increase as extra Budget costs hit, driving up the price of a pint.
It said: ‘In common with other operators across the sector, we are not immune to the many cost headwinds in the second half following the Government’s recent Budget, notably the increase in national living wage and national insurance from April.
‘We estimate the full year impact of these two items is £2.6m, with the initial impact falling in the final quarter of our financial year.
‘We had previously indicated that we would incur £1.2m of additional costs in 2025 as a result of the change in logistics arrangements with GXO. We now estimate these costs will be £0.3m higher than this figure in 2025.
‘We have plans to mitigate the majority of the cost increases over the next 18 months, through proactive management action including price increases and cost efficiencies.’
Shepherd Neame said it ‘traded strongly’ over the Christmas period, with like-for-like retail sales up 7.4 per cent for the five weeks to 6 January.
The brewery said it enjoyed ‘many record-breaking days in individual pubs, with particularly strong trading in the final few days up to Christmas day itself’.
It flagged particularly strong retail sales within the M25, where like-for-like sales rose by 13.3 per cent.
Total year to date like-for-like sales for the 26 weeks to 28 December increased by 4.4 per cent.
On beer sales, Shepherd Neame said: ‘Total beer sales remain in decline driven by the ongoing fall in bottled beer sales, offset in part by strong local direct supply. Total beer volume for the first half was -12.6 per cent, own beer volume was -13.9 per cent.’
In October, Shepherd Neame flagged concerns about the impact of proposed labour market reforms.
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