Pricier barley, costly packaging set to drive up beer cost

In the past year, the price of barley—one of the key ingredients of lager—has surged 65%, besides spikes in packaging and transportation costs

With prices of barley and other raw materials surging, consumers may have to start paying more for beer, especially during peak summer. Brewers are seeking an increase of 10-15 per cent in prices, as per a report by The Economic Times.

In the past year, the price of barley—one of the key ingredients of lager—has surged 65 per cent. The industry is also dealing with inflated packaging and transportation costs.

With states individually controlling alcohol prices, some states such as Telangana and Haryana have increased prices while other states are yet to do so.

AB InBev, the parent company of Budweiser and Hoegaarden beer, said it has urged policymakers to allow alcohol manufacturers to increase prices. "We see commodity and non-commodity price challenges not abating anytime soon... Raw materials like barley, along with packaging costs, remain high, which has always been the most stable in terms of pricing and availability outlook," Ashwin Kak, head of procurement and sustainability for India & South East Asia, AB InBev was quoted as telling the publication.

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According to the report, March-July is the peak season and accounts for 40-45 per cent of beer sales. This year, the industry has mostly relied on barley produced in Rajasthan, instead of importing it, said Pramil Jindal, managing director, Barmalt Malting India.

Ankur Jain, chief executive of Bira 91 said they are “focusing more on cost management and product mix management to mitigate the impact of rising prices of key inputs.”

With domestic production of barley being limited, most breweries, distilleries and malting units rely on imported barley as domestic production is limited, says PK Jain, chairman, PMV Malting, which supplies malt to AB InBev, Carlsberg and Heineken.

"Some amounts of adjuncts such as wheat, maize and sorghum are used, but their usage is limited to 10-15 per cent. There is no reason why beer prices shouldn't go up," Sovan Roy, director-general, All India Brewers' Association, was quoted as saying.

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