E-Malt.com News article: Antigua and Barbuda: Antigua Breweries to increase beer prices due to higher costs

Antigua Breweries, the producers of Vita Malt, Wadadli beer, Guinness and Red Stripe beer, has announced that the public should expect an increase soon, Antigua Sun reported January 10. Their distributor, Kennedy’s group of companies, has said that it will try to hold out for as long as possible, without increasing prices.

The increase in the production price of beer and other products has been attributed to the rising costs of barley and hops internationally. Hops provides the aroma and bitterness to beer while barley, which is also used to make malt, gives it colour and sweetness.

Also a factor, is the rising cost of transportation due to hikes in oil prices for the other ingredients.

Manager of Antigua Breweries James Massiah said that an increase is imminent from the company, maybe as close as the end of January. “I can’t just put a finger on it and say when it is going to happen,” he said.

He said that the price of barley, particulary, had increased in 2007 due to a bad crop in 2006. Considering the rising cost of living, they decided not to raise their prices last year. But because of another bad crop in 2007, Massiah said they have projected that their operational costs will increase even more in 2008, forcing them to consider raising their prices to protect profit margins.

“Hopefully, the annual crop in 2008 will be good but we are not sure. The price for malt has just gone out of the roof,” he said.

The manager said that although they might increase their prices, the distributor has the choice to pass the increase to their retailers and consumers. He said that after meeting with them next week, the situation will be much clearer.

Neil Cochrane, sales and marketing manager of the Kennedy’s group of companies, the distributor of the products of Antigua Breweries, said all companies that use the raw materials are feeling the pressure of increased production costs.

He, however, was unable to provide the exact figures that would represent the increase in the production costs.

Cochrane said though, the hike in material costs became noticeable about Nov., 2007; their company had decided to absorb the price increase to be sensitive to the existing market conditions.

He said, “We will do that for as long as we possibly can. We cannot subsidise the price increase forever, but at least we are going to give them (consumers) time to understand that the price increase is coming and not just going to surprise them with it.”
Cochrane said though, they do not expect the increase will happen anytime soon.

According to international media, barley has become more expensive because there is a greater demand for other feed grains, including barley, for livestock now that there is less corn available to feed animals.

Farmers have been diverting more of their field space for corn, which is being sold to make ethanol, a fuel alternative blended with gasoline.


11 January, 2008