Two pubcos defy VAT increase by freezing beer prices
Two pub companies have revealed that they are to freeze beer prices despite the increase of the VAT rate to 17.5% in a bid to help out licensees.
Charles Wells Pub Company announced yesterday that it would absorb price increases applied by its main supplier, Wells and Young's Brewing Co until "at least" 1 April 2010 and has also agreed to hold any duty increase on beer, wine and spirits duty that is likely to be imposed on the same date as part of the Chancellor's Budget.
Speaking about the move, Charles Wells Pub Company sales and marketing director Peter Wells said: "We recognise that 2010 could bring a triple attack on licensee margins, with changes to VAT and duty adding as much 8p to the price of a pint of beer before supplier increases are factored in. By taking decisive action now, we expect to ease the impact for our customers during a traditionally quiet trading period and ensure that these external factors don't all hit home at once."
The company added that it also intended to monitor conditions when other supplier increases are announced during February and March. Although the final level of its support depends on the scale of price rises, it indicated it plans to absorb a large proportion of those rises until June.
Meanwhile southern England-based pub company Brakspear said that it wouldn't raise prices on Brakspear beers for the whole of 2010.
Commercial director Tom Davies said: "The recession has created an extremely tough trading environment for many of our pubs. The Government appears to be deaf to the industry's appeals for a less damaging taxation policy, so we're doing what we can for our tenants.
"All pubs are bound to feel the impact of the raised VAT rate this month, but at least our pubs won't also have to deal with the annual increase on Brakspear beers."
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By Neil Gerrard
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