Inflation forces Coors to up prices

05 September, 2008

Coors has announced a price hike in the face of inflation that it says could bring UK brewing to its knees.

The brewer has put its wholesale price up by 3p a pint across all channels, with effect from Sept 29.

Chief executive Mark Hunter said: "We are seeing input cost inflation of a magnitude that could cripple the UK beer industry.

"Input costs, such as barley, diesel, metal and energy have risen well above inflation - barley, for instance, has gone up by more than 40% in the last year. It is no longer tenable to fully absorb the rate of input cost inflation and, after much deliberation, the company needs to make an extraordinary price increase."

He added: "We have battled hard against the current trading environment with the support of our customers and a strong brand portfolio, but the severity of inflationary increases we have experienced since the beginning of 2008 has significantly exceeded expectations."

The Producer Price Index, which measures the price changes of goods such as material and fuel exchanged between manufacturers, has risen more than threefold since February 2008, from 8.9% to 30%.

Inbev UK announced a wholesale price hike of around 3.3% a month ago, and at that time Coors said it had no plans for a price increase in the short term.

Scottish & Newcastle UK and Carlsberg said they did not have imminent plans for price rises, but S&N's off-trade sales director Mark Gerken said he was not surprised by Coors' move.

"I can fully understand and sympathise with why brewers big and small are taking a price increase, because of the unprecedented levels of inflation from raw materials to packaging to energy," he said.

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