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Subjects: What goes up must keep on rising, when it’s fine in the wet, low-and-no sales lower than you’d think
Authors: David Read, Phil Mellows, Glynn Davis
What goes up must keep on rising by David ReadIn recent weeks, two new acronyms have been attracting the attention of hospitality operators. Both have emerged from the energy sector – the nattily named nuclear regulated asset base (RAB) and charge and transmission network use of system (TNUoS) tariffs to be precise.
RAB is a new government-backed financing model designed to attract private investment into large-scale infrastructure projects, such as new nuclear power stations. Traditionally, investors in nuclear plants wait until the site is operational to see returns. The RAB model changes this by providing investors with a reliable income stream during the construction phase. This funding is supported through a levy on all energy consumers, meaning an additional charge will appear on electricity invoices raising costs by around 1.7% from 1 December 2025.
If your contract is “pass through” then the charges will be automatically applied. If your agreement is a “fixed contract” then some suppliers may absorb the costs initially, but most reserve the right to adjust prices due to regulatory changes like these.
TNUoS tariffs are not new and are designed to recover the cost of operating, maintaining and expanding the national grid. The UK's National Grid is under stress from aging infrastructure, the fluctuating nature of renewable energy sources and increasing demand as a result of electrification, such as electric vehicles. Many new renewable projects are now being delayed by a simple lack of grid capacity.
TNUoS tariffs for 2026 are yet to be published, but the National Energy System Operator’s (NESO) five-year view reveals a steep trajectory for TNUoS charges. In 2026, NESO forecasts the average TNUoS to be 10.6% of the average annual electricity consumer bill – an increase in the proportion of the customer bill from 5.8% in 2025-26. This level of year-on-year increase is also forecast to continue each year through to 2030.
The hard reality here is that we are now in the midst of a global energy transition from carbon to renewables. Over time, we may well see a cost dividend from the enormous investment required to make this transition a reality, but for the foreseeable future, energy that is not self-generated will continue to increase in cost faster than any of us would wish. On the plus side though, it does make small-scale user-generation of renewables an increasingly viable proposition.
What is happening in the energy sector is a single lens on the much wider global challenge of inflation. For example, food and drink prices into the hospitality sector rose 0.7% in the month of September alone, taking the Foodservice Price Index from CGA by NIQ and Prestige Purchasing to a record high. This latest movement marks the sixth consecutive month of rising wholesale prices for the UK hospitality and foodservice sector, underscoring persistent inflationary pressure across multiple categories.
As a sector, we need to be cautious about any expectation that we might return quickly to the sunlit uplands of stable low inflation that we experienced from the mid-1990s for the best part of 25 years. The UK's public sector net debt was 95.3% of GDP at the end of September 2025, a high level that is shared by most of the rich world economies.
High levels of debt cause interest payments to reach a point where they are just added to the debt over time, increasing debt and interest payments further. While all five of the levers that government can pull (inflation, more growth, less spending, more tax and default) will no doubt feature to some extent, taking a more benign approach to curbing inflation is looking increasingly like a front-runner.
Since our sector emerged from the covid pandemic, it’s been nigh on impossible to find a cost line on the P&L that hasn’t risen sharply. Trading has become less about growth and more about survival, which, of course, is ultimately just about cash. In the past, hospitality businesses have often sought to trade their way out of tough times like these, but the more successful operators have realised that the optimisation of cost is vital to cash generation.
This requires a laser like focus on operational efficiency and quality, elimination of waste in all its forms and the rigorous management of the buying prices of bought in goods and services – all while creating more delighted customers than ever before. Survival is no easy task in this market, but as always, the best will survive and, ultimately, thrive.
David Read is chairman of sector procurement experts Prestige Purchasing. More details on RAB and TNUoS can be found here.
When it’s fine in the wet by Phil MellowsLast month, I spent a day “in-trade” with Simon Collinson, the boss of Oak Taverns. The term “in-trade”, I’ve always thought, was a useful one for those of us in the pub industry who fear ordinary civilians might think we’re on a jolly pub crawl when, in reality, we’re hard at work.
It came about because Collinson has made the bold decision to make each of his 18 pubs “all-wet”, another useful piece of specialist terminology.
For decades, we’ve been hearing that food is the future for pubs, yet recent stats have suggested that “wet-led” venues are performing ahead of the market, and I’ve noticed that more pubs are choosing to close their kitchens completely.
The example I couldn’t miss is the pub over the road from me, The Independent in Brighton. A decade or so ago, the former Hall & Woodhouse tenancy, then known as The Walmer Castle, was bought by a restaurateur who knew his beer and thought he’d combine high quality dishes with beer from what was then a new wave of craft brewers.
It proved a bit of a struggle, and in the first covid lockdown, he was forced to expand the range of beer to 200-plus cans and become an off-licence.
That went so well the pub continued to focus on sourcing interesting brews, installing a tap wall that now pours more than 20 different craft beers – including a couple made in the nanobrewery that has been installed in what was the kitchen. And the ex-restaurateur has opened a second taproom in town with a similar all-wet offer.
What works for one or two pubs may not necessarily succeed across an existing estate the size of Oak Taverns. Indeed, it seems a risky strategy, especially when that estate is mostly in small towns and villages across the breadth of a region like the Cotswolds, where you’d imagine the locals are the sort of people who, when they go out, will want to eat and eat well.
As a family-owned firm, Oak Taverns has been able to respond flexibly to changes in the market. Since it was founded by Ian Collinson 34 years ago, it has run 110 different pubs, including food-led operations such as the Black Horse in Barnet (currently closed). Collinson describes that one as “gastro-esque”, and it was the experience of running it a dozen years ago that prompted the idea that all-wet may be the way to go.
“There were staff issues, cost issues, we were spending a lot of time on menus, on making sure the right controls were in place,” he says. “Then you suddenly realise you’re losing money on it four to six months of the year. We realised that whatever you do, you’ve got to be the best at it – and for us, that’s drinks. We couldn’t do it with food as well.”
Especially at a time when people have higher expectations from dining out, and the costs of delivering that are rising sharply. Not to mention the challenge of finding and paying a good chef.
In that context, not doing food becomes a tempting option. But you need to make sure you’re doing something else well enough to provide an alternative draw. And for many, including Oak Taverns, it’s beer.
Beer has always been at the heart of the pub, but we’re seeing a polarisation between pubs that have little more than a range of draught lager (and do something else well, such as sport) and those that specialise in well-kept local cask ale or in craft beer, or a bit of both. Done well, that can win you a strong following.
On top of that, Oak Taverns has developed relationships with street food vendors that pop up outside the pub two or three nights a week serving a limited menu from a van, a relatively worry-free way of offering customers solids and giving them another reason to get out of the house.
At some level, I think people, even people in the Cotswolds (yes, I know some of them are working class – I’ve watched “This Country”), appreciate a wet pub where food has not encroached so much that it’s really a restaurant.
And the fact that some operators are proving that not doing food at all can be a viable commercial option is, dare I say, encouraging. We need pubs of all kinds, and we especially need pubs where people can come together, undistracted by fancy menus and flashing screens, in an undemanding, convivial space that nourishes our minds and social spirit as well as our bodies.
After all, if you’re feeling peckish, there’s always a packet of nuts!
Phil Mellows is a leading industry commentator
Low-and-no sales lower than you’d think by Glynn DavisWhen staring out the window of Pret A Manger off Trafalgar Square recently, nursing a coffee between meetings, I was distracted by a taxi passing by with a bright advertising banner running along its side.
The glitzy campaign was for a new premium non-alcoholic lager called Bero, which included the image of a shiny gold coloured can of beer alongside the face of actor Tom Holland. For starters, I thought he doesn’t look old enough to drink alcohol, so it is definitely best that he is aligned with such a product. Secondly, l associate Bero with flour and a range of incredibly popular cook books back in the day, which my mother relied upon religiously. But maybe that’s just me.
The taxi had not only disrupted my coffee break, but also reminded me of Dry January, which I had been trying my best to avoid – along with the associated hype that invariably surrounds it post the Christmas splurges. Now, I’m not a particularly keen film-goer, so when I enquired about Holland to my wife, she was fully clued-up and filled me in. And added that maybe he is the person who can really sell non-alcoholic beer to the masses.
He is certainly yet another name in a long line of celebrities associated with the beers, wines and spirits (BWS) category, but he has more of a challenge on his hands than Kylie, Clooney and the rest of the Hollywood drinks promoters. He is targeting a product area where sales remain very low and challenging. Yes, we are seeing some growth, but the absolute numbers remain tiny.
Evidence comes from YouGov and CACI, which supplied me with figures for early December. Although the penetration of non-alcoholic beer grew by 14%, this only meant the category moved up from 0.58% of the population drinking it in 2024 versus 0.51% in 2023. CACI suggested this puts us in the realms of “margin for error”, and if we go back to 2022, the share was 0.52%, so all we can read into these stats is that the sector is as flat as a poorly conditioned pint of beer.
According to IWSR, no-alcohol beer and cider has grown to account for around 2% of total beverage alcohol market sales in the UK, and it finds the older Generation X and Boomers groupings are driving this demand as they address their booze-addled heady days of youth. Where IWSR is, surprisingly, finding less resonance is with trendsetting younger audiences. It suggested: “The category has witnessed a boom in popularity in recent years, but sales are expected to flat-line in the longer term.”
In contrast, the CACI data found the 18 to 24-year-old grouping was, in fact, the largest consumers of non-alcoholic beer, although it involved only 2% of them. It also has to be noted that these youngsters have embraced all types of non-alcoholic alternatives. They over-index on everything from carbonated drinks to smoothies. So let’s be clear, it’s not like they have all turned to non-alcoholic beer as a substitute and are going to fuel its future growth.
Against this backdrop, we continue to be deluged by surveys on abstinence, stats on online searches for non-alcoholic drinks and research on wellness trends such as zebra-striping. We are also awash with the marketing campaigns of existing and new non-alcoholic beers and other such BWS products. Welcome to the ever-expanding party, Mr Holland. We’ve been expecting you.
This is undoubtedly good news for media outlets – newspapers, magazines, London Underground, TV and research houses are all cashing in – but what is it doing for the funding and P&L of these brands? It would be interesting to see what percentage of revenues they are spending on marketing and promotional activity. Judging by the stats from the likes of CACI and IWSC, some over-exposed brands must be in precarious financial positions.
As brands continue to pay a high price to buy sales, it will become increasingly cutthroat in the non-alcoholic market. To date, there has been talk among some in the industry that they have been happy to see their advertising help grow the overall non-alcoholic category. The rising-tide-lifting-all-boats theory.
That thinking is likely to dissipate rapidly as we increasingly move into winner-takes-all territory where a few brands – invariably from the major brewers – control what is ultimately not that big a category. Despite all the hype, surveys and advertising that is being thrown at the wall, I’d argue that not that much is sticking.
And next time you hear about the youngsters driving the non-alcoholic trends and the wellness agenda, let’s also consider that the 18 to 34-year-old grouping are also the chief drivers of the growth in Guinness sales, so they are no doubt also over-indexing on stout.
Glynn Davis is a leading commentator on retail trends
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