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Business News

SABMiller ups beer prices after ingredients costs soar

Add beer to milk, oil and bread. SABMiller, brewer of Peroni and Miller Lite, warned yesterday that it would pass on the rising costs of ingredients to customers through higher prices, piling pressure on consumers already struggling with hefty increases across a range of basic energy and food products.

The price of brewing barley has doubled over the past year; wheat has rocketed as well. SABMiller said however that it intends to protect its margins and that "pricing and mix benefits are again expected to compensate for cost increases".

The company's move adds weight to the prediction made by the British Beer and Pubs Association earlier this year that the average cost of a pint, between £2.50 and £3.10 today, will increase to £4 by year-end, and will win it few friends in the pub.

SAB increased profit before tax last year to $3.2bn, a 16 per cent increase over last year, thanks in part to a heavy marketing campaign in the UK of Peroni as a high-end lager. It has already raised prices across its portfolio.

The company has otherwise been able to sail largely unscathed through the economic torpor that has taken hold in developed economies in Western Europe and America. The world's second largest brewer is heavily weighted toward the developing world, where growth in Latin America and Africa were both strong, with volume growth of 5 and 6 per cent respectively.

The falling dollar, the currency the company uses in its accounts, also helped to boost profits booked in other markets.

Profits in South Africa fell by 6 per cent after the company lost a distribution contract for Amstel.