Cost of Living Crisis- What Can We Do?

We all enjoy drinking delicious beer. (If you are a beer lover and you’ve landed here by accident, don’t hit that ‘back’ button just yet). Today we're talking about something much bigger than beer. Something that affects us all without bias is the rapid and unsustainable rising cost of living.

As much as we’d like it to be, life isn’t always about drinking a tasty beverage and spending time with our family or mates. Most of us live our waking hours grinding away at one thing or another. Whether paid or unpaid, we get out of bed every morning and get to work. 

We do this to help build better lives, for ourselves and the next generation. This has been the way since the dawn of humankind. However, in recent years, these efforts have felt moot. Increasingly, more of us are just staying afloat and unable to get ahead financially. 

Today, the quality of life in Britain and the rest of Europe is trending downward. A recent survey found that nearly a quarter (23%) of Brits have had to cut back on key essentials. And 43% of survey respondents stated they could still afford essentials but had to make cuts elsewhere.

The Inflating Price of a Pint

According to a recent YouGov survey commissioned by the Campaign for Real Ale (those magnificent bastards), 52% of British people believe that the current price of a pint is unaffordable. That number is a 10% jump from a similar survey conducted in 2019. 

This comes as no surprise to many of us. In London, it’s normal to pay upwards of around £7- £8 for a bog-standard pint of ale in many venues. Across the country, the average price of a pint has jumped from £2.30 in 2008 (what a dream!) to £3.95 today. 

According to consultants CGA, the average price of a pint should only be £3.35 due to inflation alone. What accounts for the additional 18% increase in average cost? Well, the answer to that question isn’t so simple. 

Cost of Living- What’s going on?

Image Source: YouGov

An August survey found that the most pressing priority for the public was “the rise in the cost of living” for 74% of respondents. 

There are many issues feeding into our current state of affairs. We can’t cover all of them in detail in a blog post, but we’ll try anyway. 

The Cost of Goods

The Consumer Prices Index (CPI) is one standard measure of inflation in the UK. It measures the average costs of 700 different goods and services each month. As of this month (October), the Office for National Statistics (ONS) reported that the CPI was at an inflation rate of 10.1%. This is the highest rate in over 40 years!

Image Source: ONS

To put that into perspective, a “healthy” inflation rate is around 2.5% per year (which it mostly had been since recovering from the financial mess of 2008). The above chart from the ONS depicts what looks like an out-of-control train going off the rails. And we all know what comes next–a trainwreck!

Energy

While consumer goods are rapidly rising in price, they are not the only culprit in this semi-runaway inflation. Domestic energy prices have more than doubled since the start of 2021. 

Ofgem regulates gas energy and electricity prices through a government-levied price cap. The purpose of Ofgem is to prevent market volatility from directly affecting the consumer; however, this has not stopped bi-annual price hikes of over 50% for the past few years.  

Adding potentially thousands of pounds to a household’s annual bills has many worried about the winter. The poorest in our country will have to decide between heating and putting food on the table!

Ukraine

In Ukraine, Thousands of civilians and soldiers are dying. Entire cities are being destroyed, all in the name of one man’s land grab and attempt at some sort of twisted legacy. 

Let’s be clear, our rising living costs are nothing compared to what is happening to Ukraine and its people (and the poor Russians being drafted into an ill-fated and poisonous war). 

Don’t be like Roger Waters. If you can spare anything, send financial aid to Ukraine via the Disasters Emergency Committee donation page. 

Sanctions against Russian oil have sent European nations in search of replacements. This in turn has driven up the cost of electric and gas energy (natural gas is now being over utilised and reserves are low).

The disruption caused by the war in Ukraine has also led petrol prices to skyrocket into the stratosphere. For commuters and freelancers, this is just another costly pill they must swallow. 

Conservationist and avid homebrewer Liam Matthews stated, “As a self-employed contractor travelling to jobs across South Wales the rise in fuel cost has more or less swallowed my disposable income. There’s no longer any money for luxuries such as craft beer or home brewing supplies.”

Brexit

We hate to bring up the forever-polarising Brexit. COVID-19 and the current cost of living crisis have sure aged all of us over the past three years or so. The referendum of 2016 seems like it was over a decade ago. 

Brexit was a mess when it was activated in 2020. Customs issues, import and export duties, and serpentinous lines of lorry trucks all helped to disrupt supply lines and raise consumer costs for essentials like groceries. 

Additionally, Brexit has contributed to lost trade and tax revenue which has been passed onto the consumer.

Tough Times for Craft Brewers

In 2020 and 2021, breweries had to deal with COVID-19, increased import duties, and supply chain disruptions that included European CO2 shortages. The struggle continues as independent craft brewers have not been spared the consequences of growing inflation. 

Recently, Scottish MP Owen Thompson stated “[never] ever before has run a craft brewery been so challenging” as he urges the government to step in and update the Small Brewers Relief (SBR). And he couldn’t be more urgent. Many breweries are reporting electricity bills jumping up to over 300% from the previous year!

In a recent article from the Morning Advertiser it was reported that although hitting record turnover, Northern Monk is expecting “cash impact” and “some fallout” heading into 2023 due to rising C02 prices. The medium-sized Leeds brewery s attempting to reduce its CO2 usage but without the capital for efficiently CO2 recapture solutions available to the big brewers.

And it’s small brewers and startups that are reeling the most. Our founder Matty had this to say about rising costs:

“It’s a nightmare, everything is getting squeezed. All costs are up from ingredients to packaging to shipping. Trying to provide a product which a consumer sees as good value while making any margin is now brutally difficult. And this means that ultimately the smaller companies suffer as our costs are always higher than those with economies of scale.”

Unfortunately, much of these rising costs necessitate being passed on to the consumer. That affects all of us who spend any amount of money on craft beer every month. Perhaps the people taking the biggest knocks are the brewery staff themselves. 

Earlier this year, Alex Troncoso of Lost & Grounded Brewers told The Drinks Business that “We are seeing significant increases across the board (10-20%) for all manner of inputs, such as cardboard and transport costs. Wages are going to become extremely relevant in the near future as inflation is applying pressure to the standard of living.”

Brewers, packagers, salespeople, taproom staff and other workers are the heart and soul of our industry. We know it looks like a laugh, but brewing, selling, and serving beer is a hell of a lot of hard work! Don’t kid yourself–we don’t do it for the money!

Rising costs are likely to deny many well-deserved raises and bonuses. And with annual inflation skyrocketing, any pay rises below 8-10% effectively lower one’s salary in real-world terms.

What Can We Do?

The first thing is to make sure you can take care of yourself and your family. With the prices of essentials flying towards the moon, you need to get your priorities straight. Beer will be much lower down the list than paying your rent or mortgage, utilities, and monthly grocery bill. 

For those of us needing to cut back on wants and luxuries, that may mean buying less beer (say it isn’t so!). If you are reducing your beer budget, we have one word of advice for you: go for quality over quantity. 

We’ve already covered the benefits of cutting back and/or drinking non-alcoholic beverages in an early article. Drink less and make having a beer a real treat. You can do this and still  support the businesses that make the products you love. 

A recent poll found that 82% of Brits believe their government is managing the cost of living badly. It’s time to get out and vote! Support those willing to bring about positive changes.

Image Source: YouGov

Finding Help- Cost of Living Support

If, like many of us, you are struggling to make ends meet don’t give up hope. There are diverse places to look for financial assistance. A good place to start is the GOV.UK’s cost of living help portal. 

Here you can find answers to most of your questions and see what type of assistance is available for your situation. This includes signing up for Universal Credit and eligibility for a one-off Cost of Living Payment to be disbursed to those in need. 

Make sure you run down the full list and exhaust all support options. Another good place to seek guidance is Citizens Advice. Here they can explain everything in plain English and streamline the process of applying for financial assistance. 

During these uncertain times, they are also a good shout to direct any debt management questions–can’t sacrifice food and heat just to pay those creditors!

Feeling the weight of a deeply concerned public, the government has stepped in to offer a universal £400 energy rebate that will be paid off in 6 monthly instalments. They had also promised a price freeze of £2,500 for the average household until October of 2024. (Unfortunately, newly minted Chancellor Jeremy Hunt has already reversed this relief. Instead, the price guarantee will only be in place until April 2023).

If you haven’t yet, you should be receiving correspondence from your energy company notifying you of the £400 rebate. You don’t need to do anything for this, the credit will be automatically applied to your account over the next 6 months. 

It’s not always easy to find the time or be organised when it comes to planning a budget. Luckily, organisations such as Turn2Us and MoneyHelper have a benefits calculator and budget planner respectively. A focused search online will turn up all kinds of useful tools. 

Don’t forget places like r/UKPersonalFinance on Reddit to seek budget planning advice.

Leave No One Behind

Regardless of how we got here, we’re all in this mess together. Whether it’s saving the planet, or taking care of the vulnerable, we need to take action. If you’re struggling, take the necessary steps to get help.

We also need to get out and vote. Besides casting ballots, we can also vote with our wallets–with less money to go around, choose to support those businesses with ideas that stand for something. 

At Sheep in Wolf’s Clothing, our mission is simple: to promote inclusivity, community, and sustainability while making fantastic beer!