Interbrew to push up UK beer prices

Pub owners vent anger at Belgian brewer
Click to follow
The Independent Online

Interbrew, the world's second largest brewer which is being investigated by competition authorities, is attempting to jack up the price of one of its most popular beer brands in the United Kingdom.

Interbrew, the world's second largest brewer which is being investigated by competition authorities, is attempting to jack up the price of one of its most popular beer brands in the United Kingdom.

The Independent on Sunday has learned that the Belgian company is planning to increase the price at which it sells Stella Artois to Punch Taverns, one of Britain's biggest pub companies, with 5,150 outlets.

The revelation will be of tremendous interest to the UK's Competition Commission which is looking into Interbrew's £2.3bn acquisition of Bass Brewers. The deal gives the company a 32 per cent UK market share and the commission has warned that Interbrew may have to sell Bass Brewers if it is found to be against the public interest.

"I asked Interbrew why it was raising the prices and I was told: 'Because Stella Artois is a strong brand'," said Hugh Osmond, chairman of Punch. "It is extraordinary that Interbrew wants to put prices up while the cost of brewing is falling."

Interbrew's proposed price hike is set against a 16 per cent fall in wholesale beer prices since 1994. Punch's Stella contract with Interbrew ends next month. Mr Osmond said: "At the end of the day we will replace the beer with a different brand if we can't resolve the dispute."

The price that pub companies pay for a barrel of beer is a closely guarded secret, but it is thought that a barrel of Stella is sold for between £175 and £300 depending on the negotiated discount. Mr Osmond said Interbrew wants to increase the price of a barrel by about £10.

The news will also worry the UK's other major pub companies which fear that Interbrew's acquisition of Bass will lead to beer price increases.

Guy Hands, head of structured finance at Japanese investment bank Nomura which owns 5,000 British pubs, said: "No single company should have more than 25 per cent market share. As a result of the Interbrew deal I expect prices to rise."

The news of the potential price hike seems to go against comments made by Interbrew's chief executive, Hugo Powell. He said: "We have no business plan that requires price increases to survive. We will do it on efficiency."

A spokeswoman for Interbrew confirmed that the company was re-negotiating its Stella contract with Punch. "A price increase in relation to this contract would be in line with inflation and any other operating cost changes," she said.

Interbrew owns Whitbread's brewing division, which it bought this summer for £400m. Trade Secretary Stephen Byers is expected to rule on the Interbrew case in early January.

Comments