Due to the effect of inflation, Heineken, the world’s second-largest brewer, has cautioned that the price of its drinks may rise.
Rising costs for ingredients and energy were cited for the warning by the company, which distributes brands such as Strongbow cider, Amstel, and Europe’s best-selling lager, Heineken.
This price hike warning comes after Cobra’s founder announced that the company’s pricing will climb due to “vicious” cost pressures.
Neither company has stated how much their prices will rise.
“These kind of price increases and inflation, I think we have not seen in a generation,” said
Heineken’s chief executive Dolf van den Brink.
Hiking prices however could result in “softer beer consumption” since consumers have already decreased spending because of rising costs of living, he added.
Inflation in the United Kingdom reached a new 30-year high in January, as energy, fuel, and food expenses increased. The cost of living is now rising faster than salaries, with an increase of more than 7 per cent projected this year.
Unilever, the creator of Marmite, Greggs, and Pret a Manger, a sandwich business, have all warned of price hikes as their costs grow.
Heineken’s input costs are expected to grow by the mid-teens percentage due to barley prices tripling from a year ago and aluminum prices rising by roughly 50 per cent.
The company’s transportation and energy expenditures have also increased.
It follows a successful year for the Dutch brewer, during which consumers splurged on booze because to the pandemic.
In 2021, Heineken reported an 11.3 per cent growth in net revenues to 21.9 billion euros, with sales of its Heineken-branded beer up 17.4 per cent.
The brewer’s profits increased by 80 per cent, but the company warned that the future year would be “uncertain” due to “inflationary concerns.”
Huw Dixon, a Cardiff University economist and a member of the National Institute of Economic and Social Research, questioned the brewer’s choice to raise pricing.
“Heineken’s strong sales seem to indicate that their profit margins aren’t being squeezed [yet] even though there might be certain costs that are rising,” he said.
“It’s very hard for us as experts to say whether Heineken’s increased production costs are wholly reflected in higher prices for customers.
(Adapted from Express.co.uk)