Independent breweries are warning they may have to put up prices by up to 15% as they are more exposed to soaring barley prices than the big breweries.
Beer prices are expected to rise across the board next year as a result of a 50% rise in wheat and a 100% increase in barley in recent weeks. The price rises have already wiped value off the shares of mega-breweries such as Carlsberg and Diageo.
But independent brewers said they would be hit even harder than global operators by the cost hikes because they are more exposed to commodity market turbulence than the likes of AB InBev believed to have agreed prices on barley up to two years ago.
Don Burgess, founder of Freeminer Brewery, which supplies beers such as Bumble Bee and Goldminer to The Co-op, said the price hikes would add yet more cost on top of next year's tax hikes. "This is bound to cause a further hike," he said. "It's the majority of small brewers who cannot afford contracts to buy in advance that will bear the brunt. The only answer is that the cost of beer at the brewery gate will go up by 10% to 15%. Price hikes are long overdue anyway."
Keith Bott, chair of the Society of Independent Brewers and MD of Titanic Brewery, which sells beer to Tesco and Morrisons, said: "The big boys have spread the costs out but their costs will still have to go up eventually. The little guys will take the cost hikes full on the chin. It's difficult for the little guys because they rely on the spot market and it will have a significant effect on production costs."
High grain prices come as brewers wrestle with falling volumes, the 2.5 percentage point rise in VAT in January and a 2% above-inflation duty hike in April.
"Raw materials are anywhere between 3% and 10% of the price of beer compared with tax, which is over 30%," said the British Beer and Pub Association. "This price movement is dwarfed by the tax increase on the horizon. When the pressure is on, the government should not make it worse."
Beer prices are expected to rise across the board next year as a result of a 50% rise in wheat and a 100% increase in barley in recent weeks. The price rises have already wiped value off the shares of mega-breweries such as Carlsberg and Diageo.
But independent brewers said they would be hit even harder than global operators by the cost hikes because they are more exposed to commodity market turbulence than the likes of AB InBev believed to have agreed prices on barley up to two years ago.
Don Burgess, founder of Freeminer Brewery, which supplies beers such as Bumble Bee and Goldminer to The Co-op, said the price hikes would add yet more cost on top of next year's tax hikes. "This is bound to cause a further hike," he said. "It's the majority of small brewers who cannot afford contracts to buy in advance that will bear the brunt. The only answer is that the cost of beer at the brewery gate will go up by 10% to 15%. Price hikes are long overdue anyway."
Keith Bott, chair of the Society of Independent Brewers and MD of Titanic Brewery, which sells beer to Tesco and Morrisons, said: "The big boys have spread the costs out but their costs will still have to go up eventually. The little guys will take the cost hikes full on the chin. It's difficult for the little guys because they rely on the spot market and it will have a significant effect on production costs."
High grain prices come as brewers wrestle with falling volumes, the 2.5 percentage point rise in VAT in January and a 2% above-inflation duty hike in April.
"Raw materials are anywhere between 3% and 10% of the price of beer compared with tax, which is over 30%," said the British Beer and Pub Association. "This price movement is dwarfed by the tax increase on the horizon. When the pressure is on, the government should not make it worse."
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