Rising costs threaten Welsh pubs despite £1.5bn economic contribution

The Welsh beer and pub sector generates over £1.5 billion annually for the national economy and supports more than 68,000 jobs, but the industry is under threat from soaring costs, according to the Welsh Beer and Pub Association (WBPA).

Launching its inaugural State of the Nation 2025 report at the Senedd, the WBPA emphasised the crucial role of pubs in bolstering local economies, tourism, and rural communities. However, the association warned that high costs, lower business rates relief compared to England, and rising wages and National Insurance Contributions are jeopardising the sector’s viability.

Between 2018 and 2023, 6.5 per cent of Welsh pubs closed, a higher rate than in England (4.6 per cent) and Scotland (3.9 per cent). This trend has slowed slightly, but the WBPA cautioned that upcoming cost increases could further strain the sector, which is already struggling with slim profit margins.

Emma McClarkin, CEO of the WBPA, said: “The beer and pub sector is a vital Welsh industry that so many people’s livelihoods depend upon. It’s critically important both economically and socially and provides so many jobs for young adults and those seeking flexible work.

“Our industry pours more than a billion into the economy and is crucial for jobs, the community, and tourism, but with pubs making an average of just 12p a pint thanks to the huge cost of doing business, it is in a fragile state.”

The WBPA highlighted that Welsh pubs face a £6,000 shortfall this year compared to their English counterparts due to lower business rates relief. It urged the Senedd to implement permanent reforms to business rates, reduce beer duty to the EU average, and phase in new employment costs due in April.

Nick Payne, Chairman of the WBPA and Managing Director of S.A. Brains, said: “Our sector has a distinct history, character, and culture that sets it apart from the rest of the UK. Over the last decade, we have seen a blossoming of local breweries across Wales, and the past year has witnessed a slowing down in the number of pub closures.

“However, we can’t ignore the fact that margins are still slim and being squeezed further. Many operators are struggling to manage the increasing cost of doing business, and the national economic outlook remains challenging.”

Payne called on policymakers in Cardiff Bay and Westminster to collaborate with the sector to create sustainable economic frameworks that will allow pubs and breweries to remain central to their communities and economies.

The WBPA also highlighted the need for a circular economy approach that minimises additional costs and enables businesses to adapt and plan for the future.

With rising costs set to hit the industry in 2024, the WBPA is urging the Senedd to prioritise action that supports pubs, protects jobs, and ensures the long-term sustainability of this iconic Welsh industry.