Beer prices set to rise

Brewers have warned pubs that beer prices must rise next year, increasing the mounting financial pressure on licensees.

According to industry insiders, the rapidly escalating costs for the raw materials used to make beer mean that the prices are sure to go up in 2008.

The main ingredients - malted barley and hops - are set to rocket in price, after a wet summer marred by floods.

With licensees also facing the threat of alcohol tax increasing next year, rising beer prices will hit pubs hard.

Paul Hegarty, head of communications for Carling brewer Coors said: "We think the rising cost of ingredients will have an impact on our wholesale beer prices next year".

David Jones, spokesman for Scottish & Newcastle, called the brewer's cost increases "unprecedented".

"It's all a pretty bleak picture," he said. "There's been a massive increase in the cost of malted barley. On top of that there have been exceptional price increases in glass which will effect packaged beer and cider"

"We are currently reviewing our prices, and these cost increases will have to be factored into the equation. There's a limit to what brewers can absorb and we will have to pass on at least some of these increases to licensees."

Smaller brewers will also be affected by the difficult market conditions, and are faced with tough pricing decisions.

The Society of Independent Brewers is warning that the price rises could put many smaller brewers at risk.

Peter Amor, chairman of the Society of Independent Brewers said: "After wages, raw materials represent the biggest single expenditure for small brewers, who now face the dilemma of whether to put up their prices and lose trade, or absorb the higher costs and take the risk of their businesses becoming economically unsound".