E-Malt.com News article: South Africa: Beer prices are up more than previously stated - report

South Africa's breweries, including SAB, a division of SABMiller, have increased the prices of their beer far more than their publicly stated averages suggest, BusinessLIVE communicated on March, 10.

Brewing company SAB said on February, 23 that it had decided to keep its own average price increase in line with inflation at 4.5%.

However, according to Ray Edwards, group liquor executive at Spar SA, that the increases in beer prices had been substantial this year, noting that these were more than the consumer price index.

Edwards said brewers would say beer prices had increased on average by 6% to 7%. Using averages to indicate price increases was "very dangerous", he said. SAB also noted that the weighted average price increase was 6.5%.

Edwards pointed out that draught beer prices had increased at the factory gate by between 11% and 22%. The increase in the price of Hansa Marzen Gold, for instance, had risen to 22%.

"If you add excise rates, VAT (value-added tax), and wholesale and retailer mark-ups, the prices of beer increase considerably," Edwards said.

Mainstream beer like Castle had increased by 12.5% including VAT, excise rates and mark-ups by wholesalers and retailers, he said.

A businessman agreed that beer prices had spiked. In invoices in possession of BusinessLIVE, the businessman showed that prices had spiked by 18%.

One invoice received on the Budget day indicates that the price of Castle, Hansa and Black Label per case was R80.99, excluding VAT. After the Budget day, another invoice indicates that prices for the same items had risen to R95.72 per case.

"If you take 80.99 and multiply it by 18% you will get to the figure of R95.56, which means that there has been a price increase of just over 18%," the businessman said.

Robyn Chalmers, spokesperson for SAB, admitted that some of the brands and packs would increase by a higher rate than other products.

The product packs in question were niche and were comparatively low volume, Chalmers said.

When looking at the recently announced price increases, which coincided with the rise in government excise duties, it was important to consider that the final increase of 6.5% was a weighted average beer price increase across all brands and packs.



11 March, 2011