Faversham brewer Shepherd Neame says it will be forced to cut costs and hike prices to combat the rise in its cost base due to an increase in National Insurance contributions and the minimum wage.

The pub giant, which runs 290 pubs and employs 1,600 people, is far from alone in feeling the pinch of the increase which comes into force on April 1.

It says it faces “new, and unwelcome” additional costs as a consequence of Chancellor Rachel Reeves’ October Budget announcement.

And that will mean it will need to find an estimated £2.6million to cover the additional costs imposed upon it.

It comes as the firm announced its trading figures for the six months to December 28, 2024.

After what had been a “strong” period for the company - underlying profit was up 9.9% to £4.2m compared to £3.8m in the same period the year before, while statutory profit before tax grew to £4.3m from £1.1m - it confirmed the Chancellor’s increases would be felt.

It said: “We have been building steady momentum in the last 12 months.

“As a result of the Budget, we now face new, and unwelcome, cost increases in the National Living Wage and National Insurance, and will adapt accordingly. We plan to mitigate the majority of these costs over the next 18 months through a mix of price increases and cost efficiencies.”

Its chief executive, Jonathan Neame, added: “We have delivered a strong six months in a challenging market.

“The additional costs imposed on our sector are most unwelcome but the business model is flexible and we can adapt to the new circumstances.

“We have an excellent pub estate and our beer business is evolving to meet current consumer tastes and trends.”

Revenue for the period was down to £85m from £89m the year before, which the brewer put down to an “increase in pub sales and a decrease in sales from premium bottled ales”.

It confirmed its investment in the business had seen £8.8m of capital expenditure - compared to £7.4m the previous year.