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Beer drinkers may be left goggle-eyed come July as the price of their favourite tipple looks set to soar.
The big two breweries, DB and Lion Nathan, say price increases of 4 per cent or more are inevitable as brewers look to recoup some of their costs from
the skyrocketing price of raw materials and packaging.
DB is staring down the barrel of a 6 to 7 per cent rise, as opposed to 3 per cent last year, while Lion Nathan, which hasn't set its new prices yet, concedes it will be at least 4 per cent.
And the smaller breweries, which lack the buying power of the two titans, will be even harder hit.
The increase does not include what end-sellers such as supermarkets or pubs may do, as they too grapple with increased overheads such as wages.
The industry on the whole generally resets its prices on July 1, when the Government's annually revised excise rates on beer come into effect.
DB Breweries managing director Brian Blake said the increase was inevitable, as the cost of raw materials had increased quite significantly over the past 12 to 18 months. "That's probably the biggest price increase the industry's seen for some time."
European-sourced malt has increased by 50 per cent, while the local variety has gone up 12 per cent.
Sugar and aluminium have risen by between 30 and 40 per cent and transport fuel has risen 50 to 60 per cent. "You've got malted barley which is now also being used for biofuels so some of the raw materials are also being competed for by other industries," Mr Blake said. "You'll see worldwide over the next year some quite significant price increases in the industry to recover those costs."
Lion Nathan New Zealand managing director Peter Kean echoed the sentiment. "Commodity prices are at an all-time high for us - just about everything that we touch that goes into our product: malt, hops, barley, aluminium, glass."
Annual price increases have been in the vicinity of 4 to 5 per cent. "This year being hit a lot harder, you'd expect it to be at least that if not more."
Added to the mix is the Government's excise duty, which is typically set along the movement of the consumer price index. Last year, 24 cents of the price of every litre of beer with more than 2.5 per cent alcohol content was the excise duty. For lighter beers, that rate was 36 cents.
Independent Liquor CEO Doug McKay said he expected to reset his prices for July in the next four to five weeks. "The cost pressures are real and they are coming through every commodity that we buy."
