Cost of living: Heineken to put up beer prices as costs soaron February 16, 2022 at 12:48 pm

Heineken, the world’s second largest brewer, has warned that it will increase the price of its beers due to the impact of inflation.

The firm, which sells brand including Strongbow cider, Amstel and Europe’s best-selling lager, Heineken, blamed soaring ingredient and energy costs.

It comes after the founder of Cobra beer also said its prices will rise because of “vicious” cost pressures.

Neither firm has said how much their prices will go up by.

Heineken’s chief executive Dolf van den Brink said: “These kind of price increases and inflation, I think we have not seen in a generation.”

He added that putting up prices could lead to “softer beer consumption” as drinkers reined in their spending due to soaring living costs.

Inflation in the UK hit a new 30-year high in January as energy prices, fuel and food costs continued to rise. The cost of living is now rising faster than wages and is expected to climb above 7% this year.

Marmite-maker Unilever, the bakers Greggs and sandwich chain Pret a Manger have all warned on price rises as their costs rises.

Heineken said its input costs were now set to rise by a mid-teens percentage due to the price of barley doubling compared to a year ago and aluminium prices going up by around 50%.

Transport and energy costs have also risen for the business.

It comes after a strong year for the Dutch brewer, when consumers splashed out on alcohol during the pandemic.

Heineken said that its net revenues increased by 11.3% to 21.9 billion euros (£13.4 billion) in 2021, with sales of its Heineken-branded beer up by 17.4%.

The brewer’s profits rose by 80%, although it said the coming year remained “uncertain” due to “inflationary challenges”.

Huw Dixon, Professor of Economics at Cardiff University and the National Institute of Economic and Social Research, questioned the brewer’s decision to put up prices.

“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 told the BBC.

“It’s very hard for us as experts to say whether Heineken’s increased production costs are wholly reflected in higher prices for customers.”