Ethiopia: Brewers set to hike prices due to raw materials price surge

Local breweries in Ethiopia are set to introduce price adjustments to their products due to price hikes to inputs, The Reporter said on July 24.

BGI Ethiopia, the bottler of St. George, has already adjusted its price weeks ago, attributing the change to a price surge in raw materials.

Although the communication head of BGI Ethiopia did not respond to The Reporter’s calls regarding the issue, officials from BGI’s factories speaking anonymously said that the existing market price of inputs, especially the increasing malt price, has forced the factory increase price on its products.

Currently, BGI’s crate of beer sales at 500 birr, up from the previous 440 birr and similarly, BGI is selling its draft beer for 1360 birr/barrel, also showing a significant increase from the previous 1160 birr/barrel, according to The Reporter’s findings.

“There is frequent price adjustment of commodities every time. No one is regulating this informal market distortion,” said Behailu Tekle, a bar owner whom The Reporter talked to about the price hikes. “It is just that crazy things become unprecedentedly expensive; this is frustrating.”

Habesha Breweries S.C. Communication Manager, Fitsum Kelile, told The Reporter his company is also contemplating price increases although the amount has not yet been decided.

According to Fitsum, the breweries buy malt at 4000 birr/quintal, a twofold increase from what it had been during the last months of the year 2020.

However, Heineken and Diageo breweries told The Reporter that they do not plan to make price adjustments in the near future.

This price adjustment on beer products is the second one in two years. A year ago in 2020, breweries adjusted prices following the amendment of excise tax law in the country. The excise tax reintroduced in 2020 levies 40 percent tax on beverages with alcoholic content of less than seven percent. The alternative for this is 11 birr per litre, which will be implemented if it is higher than the 40 percent calculated amount.

The Head of Communications with the Ministry of Trade told The Reporter that his Ministry is not aware of any price adjustments made by breweries. But the Ministry will conduct market assessments to learn about price adjustments made by breweries, he added.

26 July, 2021