Fuller, Smith & Turner has hit out at “damaging” plans to raise alcohol duty in April as it revealed a slowdown in profits at its tenanted pubs.
The London Pride brewer said Government spending cuts, January’s rise in VAT and plans to raise alcohol duty by 2% above inflation as part of the ‘duty escalator’ would squeeze consumer spending.
But it claimed that the quality of its beers and the location of many of its pubs in the south-east left it well placed to meet the challenge.
It reported that like-for-like profits from its 200 tenanted pubs were flat in the 43 weeks to January 22, whereas in the previous half-year they were up 1%.
But sales of its own brews, which also include Honey Dew and HSB, returned to growth in the past quarter while sales from its managed pubs and hotels increased their rate of sales growth.
The Labour government introduced the duty escalator in 2008, which sees alcohol duty rise by 2% above retail prices inflation. This April it is set to rise by 6.6%.
The Chiswick-based company said: “January has started with the VAT increase and further tax rises, including the damaging duty escalator, and Government spending cuts are set to follow.
“Looking further ahead to 2011/12, cost inflation is becoming an issue and we are concerned that in these uncertain times our customers may have less discretionary spend. Despite this we are confident that we will meet our expectations for the full financial year.”
The Fuller’s Beer Company reported that sales of beer grew 1% in the past 17 weeks, whereas they had declined 2% in the previous half-year. Sales growth at its 160 managed pubs and hotels increased to 3.5% in the year-to-date, whereas it had been at 3.3% in the first half of the year.
Fullers, which operates 360 pubs, has been growing its sales and profits in recent months by closing loss-making pubs and serving more food to make up for the reduction in beer volumes which has been exacerbated by the smoking ban.