Britain's oldest brewer has announced it will raise beer prices in response to tax increases and higher wage costs set to take effect next month.
The brewer, which employs about 1,600 people, is facing significant financial pressure from the upcoming changes.
Shepherd Neame, which operates 290 pubs primarily in the South East, said the two policies announced by the Labour government last year will cost the company approximately £2.6million annually.
Jonathan Neame chief executive said: "We plan to mitigate the majority of these costs over the next 18 months through price increases and cost efficiencies."
Chancellor Rachel Reeves increased employer national insurance contributions in the October Budget while also raising the minimum wage.
The national insurance increase, coming into effect in April, is intended to help fund improvements to public services such as the NHS.
However, some companies have criticised the policy for increasing employment costs, with hospitality groups that employ many people on lower wages expected to be particularly affected.
Reeves announced the changes to National Insurance Contributions in Labour's October BudgetPOOLNeame described the current market as "challenging" in light of these developments.
He added: "The additional costs imposed on our sector are most unwelcome but the business model is flexible and we can adapt to the new circumstances.
"We have an excellent pub estate and our beer business is evolving to meet current consumer tastes and trends."
Despite the challenges, the company has shown resilience in its financial performance.
Total beer volumes fell 12.6 per cent in the second half of 2024 compared with the same period the previous year.
Revenue decreased slightly to £85m, reflecting "an increase in pub sales and a decrease in sales from premium bottled ales".
Nevertheless, underlying profit rose nearly 10 per cent to £4.2m after inflation fell last year.
Recent research suggests pub closures are ramping up across the UK PAThe brewer, known for brands including Spitfire, Bishops Finger and Whitstable Bay, continues to adapt its business strategy in response to the changing economic landscape.
Neame reported that the company "enjoyed buoyant summer trade in July and August, with consumer and business confidence high."
However, he noted that "during the autumn, confidence evaporated in the run-up to the Budget."
The situation improved afterwards, with Shepard Neame enjoying "record Christmas trading, with good growth on 2023, with many individual pub records exceeded."
Looking ahead, the chief executive acknowledged that increased labour costs have "undermined business and consumer confidence in the short term."
Despite this, he remains "hopeful that the economy will return to a growth trajectory, with net disposable income growing and interest rates falling."
Shepherd Neame's more than 300-year history makes it the oldest brewing company in the UK. This heritage has helped the brewer navigate numerous economic challenges throughout its existence.
The company's ability to adapt to changing consumer preferences remains a key strength as it faces these new financial pressures.
As Britain's oldest brewer implements these changes, customers can expect to see higher prices at its pubs
GettyDespite the government-imposed costs that Shepherd Neame describes as "most unwelcome," the brewer continues to evolve its business model.
The combination of price increases and efficiency measures reflects the company's pragmatic approach to maintaining profitability.
As Britain's oldest brewer implements these changes, customers can expect to see higher prices at its pubs and for its bottled products in the coming months.
