ICSM Hospitality Insolvency News: the Iran War has hiked energy costs putting a freeze on household spending hitting the pub trade (thank God for the World Cup)
By Harry Mottram: Two pubs close every week on average with some town centres losing their main local for good. Drive through any town or village centre and you’ll see boarded up pubs or pubs that have been converted into homes. Where I live in Somerset two of the three pubs have closed while even Bridgwater down the road that once had the accolade of having the most boozers per head has seen closures as fewer people go for a night out in a pub. That social change has been exacerbated this year by the Iran War which has caused prices to soar. A pint of beer on average is around £6 but you could pay a tenner in some places while a large glass of wine is even more.
Ian Carrotte of ICSM said: “It comes as no surprise that a war in the Middle East sends jitters through the economy. Consumers stop spending, businesses hold off on spending, lenders stop lending and the Chancellor of the Exchequer has fewer levers to pull. The Straits of Hormuz has seen a fraction of maritime traffic due to the war – a stand-off between Iran and the USA. Less oil, less fertiliser, less of everything that the world’s economy needs – giving financial directors and accounts departments the shivers. And the main knock-on effects has been a hike in fuel costs which create inflation across the economy since everything is transported by road, rail, shipping and air and that includes beer.
“This is anecdotal, but I went out for a few drinks with friends last week and was charged £10.50 for a glass of wine in my usual pub – buy a round of drinks and you need more than one £20 note. A friend in a business club in Somerset said members were cutting back on the number of social evenings they organise due to the rise in prices. If people who have deep pockets are cutting back, then many on lower wages will be doing the same – and cutting out going out altogether. So, it is no surprise that hospitality and the grocery sectors are struggling. Things go in cycles and at ICSM we’ve seen downturns in the late 1980s, the Credit Crunch of the noughties and the Cost of Living Crisis – let alone Covid. With Wimbledon, Women’s World Cup Cricket and the big one – the World Cup in the USA, Mexico and Canada – you can bet there will be a loosening of family budgets this summer – and publicans will be saying ‘thank God for the World Cup’. Will it last? Ask me in September.”
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