Peterborough brewery Oakham Ales left flat as slump in pound sends hops prices soaring

A leading Peterborough brewery is counting the cost after the slump in the value of the pound.

The drop in the exchange value of sterling against the American dollar following Chanceller Kwasi Kwarteng’s mini-budget has effectively meant a huge hike in the price of the US-grown hops that go into Oakham’s award winning ales.

Of concern is the cost of the Citra hop, which Oakham Ales was the first UK brewery to discover and to use in its brewing process, and which is now its most important in terms of quantity and value.

But the hike in hop prices is just one of a number of new costs that have been heaped on the brewery as a result of measures from the Government’s ‘fiscal event’.

A spokesman for Oakham Ales said: “The fall in the value of the pound is going to have a significant, direct and immediate impact on the cost of our biggest single ingredient.

“Over the last couple of years, USA hop growers who developed Citra have insisted that we buy Citra directly from them with payment in US dollars.

“Other USA grown hops also play a vital role for us and along with hops from New Zealand, Australia, Slovenia amongst other sources, are purchased via a Hop Factor that will be subject to the same worryingly negative exchange rate factors.

“This is on top of expected heavy increases in the price of hops and malt next year and both ingredients are energy heavy in their production.”

A feared rise in interest rates by the Bank of England to steady the Pound, will also impact on the brewery.

The spokesman said: “The impact on leisure spending by mortgage holders will be a yet another major issue for our customers in the hospitality sector and ourselves.”

Measures to hold down the cost of duty on beer are not expected to ease rising costs.

The spokesman said: "A promise not to increase the general Duty Rate isn’t a benefit when the UK imposes a level of duty on beers above that of most European countries.

"The tweaking of the proposed draught beer duty rate to include 20L containers won’t have any benefit as we don’t sell beer in containers of that size

“More generally, delaying the introduction of the draught duty rate until next summer, as opposed to February, is less than helpful and the confusion still surrounding the precise nature of the scheme makes forward planning for small and medium sized brewers extremely difficult.”