Shepherd Neame to raise prices as Budget changes take effect

Pub owner and brewery group Shepherd Neame has said that it is looking to save costs and lift prices as a result of "unwelcome" cost increases introduced in the latest Budget, as it reported a slight dip in first-half sales.

Britain's oldest brewer, which began in 1698, reported revenues of £85m in the six months to 28 December, down from £89m the year before, as declines in bottled ale sales outweighed an increase in the pubs division.

Retail like-for-like sales were up 4.4% year-on-year, with 9.0% growth registered inside the M25 and 2.3% growth seen elsewhere. However, total beer volumes were down 12.6% as the business shifted its focus away from low-priced, off-trade volumes.

Underlying pre-tax profit was up 9.9% at £4.2m, helped by easing cost inflation.

"We have delivered a strong H1 in a challenging market," said chief executive Jonathan Naeme.

"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."

The company estimates that increases in the national living wage and national insurance contributions from April will add £2.6m to its cost bill each year. "We plan to mitigate the majority of these costs over the next 18 months through price increases and cost efficiencies," it said.