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Morning Briefing for pub, restaurant and food wervice operators

Tue 20th Dec 2022 - Update: Decision on energy bill support for businesses postponed, alcohol duty frozen for extra six months
Decision on energy bill support for businesses postponed: A decision on extending help for businesses facing soaring energy bills will not be made until the new year, the Treasury has said. Currently wholesale gas and electricity prices have been fixed for firms from October until March 2023, but the help is under review due to the cost. Ministers had promised to make an announcement before the end of 2022, and the delay angered business groups and hospitality trade bodies. They said it was creating uncertainty for firms worried about their bills. “Disappointing news that government has also postponed announcement on future energy support until the new year rather than before Christmas as previously announced,” tweeted UKHospitality chief executive Kate Nicholls. “Businesses are facing daily changing rates and contract decisions in January so certainty was really needed. We urge Ofgem to continue to keep pressure on energy suppliers to deal fairly with commercial customers and bear down on continuing poor practices and onerous terms and conditions.” Unlike households, businesses are not covered in normal times by an energy price cap, which limits the amount suppliers can charge per unit of energy. But after energy prices spiked this year, the government's Energy Bill Relief Scheme fixed costs, providing a lifeline for many firms that risked going bust without the support. In October the government said it would review the scheme due to its high cost to taxpayers and publish those findings by the end of this year. Officials are considering options to extend support only for “vulnerable businesses”. On Monday (19 December), the Treasury said its final decision would now not be announced until the start of 2023. “We are protecting businesses from high energy costs this winter, caused by Putin's invasion of Ukraine, through the six-month £18bn Energy Bill Relief Scheme,” a spokesperson said. “However, this is very expensive, and we need to ensure longer-term affordability and value for money for the taxpayer. That is why we are currently carrying out a review with the aim of reducing the public finances' exposure to volatile international energy prices from April 2023. We will announce the outcome of this review in the new year to ensure businesses have sufficient certainty about future support before the current scheme ends in March 2023.” Business groups have been calling for the government to provide certainty to businesses on energy support. On Monday, the British Chambers of Commerce urged the government to make an announcement before Christmas, saying many of its members would struggle to pay their energy bills when the scheme comes to an end.

Government confirms alcohol duty freeze for further six months: The Treasury has confirmed a six-month extension to the alcohol duty freeze. Treasury minister James Cartlidge told the Commons it would give “certainty” to the industry. Cartlidge told the Commons: “I can confirm that the freeze to UK alcohol duty rates has been extended six months to 1 August 2023. While new duty rates typically come in each year on the first of February, I can confirm the chancellor will instead make his decision on future duty rates at spring budget 2023 to give businesses certainty and time to prepare. To further support the industry, we are going further by confirming if changes to duty are announced then they will not take effect until 1 August 2023. This is to align with the date the historic forms of alcohol duties come into force and amounts to an effective six-month extension to the current duty freeze.” UKHospitality chief executive Kate Nicholls tweeted this was “positive news” and added: “I hope suppliers will work too to suppress inflationary pressures in supply chain.” Emma McClarkin, chief executive of the British Beer & Pub Association, said: “This freeze will allow £180m to be reinvested into our sector at a critical moment and inject a much-needed flurry of festive cheer for pubs and breweries. It shows the government understands just how much our pubs and brewers mean to communities across the UK.” Nick Mackenzie, chief executive of brewer and retailer Greene King, added: “This announcement is welcome and will do much to support our pubs and tenants through a challenging winter as the sector continues to face severe cost pressures. However, we urge the government to keep its promise to modernise the alcohol duty system so it is fairer for pubs and supports lower-strength products. Fundamental reform is long overdue and will open up investment in the sector, enabling pubs to continue to support communities up and down the country.”

AG Barr acquires remaining stake in Moma Foods for £3.4m: Drinks producer AG Barr, the owner of Irn-Bru, Rubicon and Funkin, has acquired the remaining 38.2% equity stake in Moma Foods, the independent branded porridge and plant-based milk business, from founder Tom Mercer, and the other minority shareholders, for £3.4m. AG Barr stated: “When the company acquired its 61.8% stake in Moma in December 2021, it entered into an option deed with Tom Mercer and the other remaining shareholders, which gave it an agreed path to full ownership in the following three years. AG Barr and the remaining Moma shareholders have agreed to bring forward the acquisition of the remaining 38.2% equity stake. This will give AG Barr full control of the Moma business, which will remain a standalone, supported business unit within the group.” Roger White, chief executive of AG Barr, said: "We are delighted to bring forward the planned full ownership of the Moma business. This allows us to fully support the Moma business and brand, such that we can leverage the increased growth potential sooner than allowed for under the original acquisition structure. The completion of the acquisition is a further positive indication of AG Barr’s growth ambitions.”

Isle of Harris Distillers secures £10m funding package to support growth: Isle of Harris Distillers, based in the Outer Hebrides in Scotland, has secured a £10m funding package from HSBC ass it sets its sights on further international expansion. The funds will be used to expand distribution of Isle of Harris Gin and, when launched, its Hearach malt whisky to more than 20 international markets including the US, Canada, France and Germany, reports The Times. It has also allowed Isle of Harris Distillers to build two new warehouses, two miles from its Tarbert distillery on the Isle of Harris. The extra 2,000 square metres of warehouse space will hold 9,000 casks, equivalent to about 2.75 million bottles of spirits. The company recorded a 50% surge in online orders during lockdown, although the closure of bars, restaurants and its visitor centre dented its cash flow. The funding will enable it to press ahead with investment in the production of its first single malt whisky, the Hearach. Although well-known for its gin, the business has distilled spirit for its planned malt whisky since 2015. The Isle of Harris Distillers is owned by 18 individuals from the UK, the US, Europe and Asia, plus Scottish Enterprise, the state-backed economic development agency. The first investors, from 2014, were identified in a two-year international fundraising campaign. No shareholder has a majority holding. Ron MacEachran, executive chairman and chief financial officer, said: “As a business focused on the future, we’re excited to venture into new markets and expand our international footprint – and to introduce more of the world to the bottled spirit from our special island.” The distillery was established to support the inhabitants of Harris by creating jobs and boosting tourism to the island. 

Hostmore independent non-executive director steps down: Hostmore – the parent company of Fridays, 63rd+1st and Fridays and Go – has announced Jane Bednall has stepped down as an independent non-executive director for personal reasons. Gavin Manson, non-executive chairman, said: “I would like to thank Jane for her significant and valued contribution as a member of the Hostmore board over the past year. On behalf of the entire board and the company, I wish her and her family the very best.” Hostmore has initiated a formal search for a replacement.

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