The Vintners' Federation of Ireland (VFI) has strongly criticised Diageo's decision to increase the price of its Guinness products from 2 February, warning that the move will pile yet more pressure on pubs already struggling to survive.
Diageo confirmed today that the price of a pint of Guinness for sale to pubs will rise by seven cents and a pint of Guinness 0.0 will go up by 10 cent from next month.
It is estimated that a 7c increase would translate to a 20c rise in prices "at the pump", when VAT is included.
Diageo said that it does not set the retail price of its products and that publicans remain free at all times to set the price of its products.
"Industry-wide cost pressures remain elevated for businesses, and in order for Diageo to maintain sustainable operations in Ireland, we have advised our on-trade customers that there will be an increase to the list prices on our full draught product range," the brewer said in a statement.
The VFI said this latest increase comes at a time when margins are already being eroded by rising labour costs, high energy prices and ongoing inflation across all areas of the business.
"For many pubs, there is simply no capacity left to absorb further supplier increases," it stated.
Pat Crotty, CEO of the VFI, said that publicans are being hit from all sides, but drink costs are the biggest burden they face.
"This latest price increase from Diageo will put even more pressure on pubs that are already operating on extremely tight margins. Many will be left with no option but to pass this on to customers, which helps nobody," he stated.
"Our members understand that suppliers also face rising costs, but there comes a point where pubs simply cannot keep carrying these increases alone," he stated.
"Pubs are at the heart of local communities and suppliers depend on them for their route to market. We expect suppliers, including Diageo, to recognise that reality and to support VFI members rather than repeatedly adding to their cost base," he added.
The VFI also warned that repeated supplier price increases are contributing to rural pub closures, where pubs are already under severe pressure from declining footfall and rising operating costs.
Leader of Independent Ireland Michael Collins criticised Diageo's decision and warned that the move will put more on the pub trade and accelerate the decline of rural pubs.
"This is one of the largest drinks companies in the world squeezing small, family-run pubs that are already operating on the tightest of margins. For many rural pubs, this latest increase could be the final straw," he said.
"Every time the price of a pint goes up,more people make the decision to stay at home rather than meet friends and neighbours in their local pub. That doesn’t mean less alcohol is being consumed; in many cases it means more, but in isolation rather than in a social setting."
