Israel: The two largest brewers raise the prices of their products

Israel’s Central Bottling Company has announced it will raise the prices of beer kegs by 3%-5% on June 1, a measure which may prompt bars to drive up the cost of their draft brews, ynetnews.com reported on May, 30.

The prices of locally produced brands that include Tuborg, Carlsberg and Stella Artois are to go up by 4.9%, while imported brews like Hoegaarden, Leffe, Guinness, Weihenstephan and Kilkenny face a 3% hike.

The Tempo beverage company, which markets Heineken, Goldstar and Maccabee, among others, has raised the prices of its kegs last month.

According the restaurant owner Shahar Levy, a keg of beer costs NIS 450 (roughly $117) on average. The new development will bump that price by NIS 22.5 (roughly $6).

"Coca Cola and Tempo are a duopoly," said Levy, who owns Jerusalem's Restobar café. They don't care about the social protest… None of the other suppliers dare to increase prices. But the Central Bottle Company, which markets Coca Cola, is a private company that doesn't have to report to anyone."

Levy said that bar and restaurant owners are now facing a tough choice – to make menu items more expensive, or to absorb the costs.

"It's true that the minimum wage has gone up, but the consumer is our boss, and we can't hike prices because he won't buy," he added. "At the same time, I have no way to punish Coca Cola, which holds 48% of the beer market, or Tempo, which holds 50% of the market."

In a letter sent to the Central Bottling Company, Levy lamented the growing utility and rent costs and said that he does not accept the impending price bump.

"We will have to significantly cut our business with you if raise the prices of the products we buy," he threatened.

The company said in response that "the minimal price update – about 20 agorot per glass – stemmed from the increase in the input that goes into production."

Tempo cited a 2.5% tax hike from January as the reason for their "price correction".

30 May, 2012