Rising raw material costs, what measures have beer companies taken?

The price increase of beer has been affecting the nerves of the industry, and the increase in the price of raw materials is one reason for the price increase of beer. Beginning in May 2021, the price of beer raw materials has risen sharply, resulting in a significant increase in beer costs. For example, the raw material barley and packaging materials (glass/corrugated paper/aluminum alloy) required for beer production will increase by 12-41% at the end of 2021 compared with the beginning of 2020. So how are beer companies responding to rising raw material costs?

Among the raw material costs of Tsingtao Brewery, packaging materials account for the largest proportion, accounting for about 50.9%; malt (that is, barley) accounts for about 12.2%; and aluminum, as one of the main packaging materials for beer products, accounts for 8-13% of production costs.

Recently, Tsingtao Brewery responded to the impact of the rising cost of raw materials such as raw grains, aluminum foil and cardboard in Europe, saying that Tsingtao Brewery’s main production raw materials are barley for brewing, and its procurement sources are mainly imported. The main importers of barley are France, Canada, etc.; packaging materials Procured domestically. The bulk materials purchased by Tsingtao Brewery are all bid by the headquarters of the company, and annual bidding for most materials and quarterly bidding for some materials are implemented.
chongqing beer
According to the data, the raw material cost of Chongqing Beer in 2020 and 2021 will account for more than 60% of the company’s total cost in each period, and the proportion will further increase in 2021 on the basis of 2020. From 2017 to 2019, the proportion of Chongqing beer raw material cost in the company’s total cost in each period only hovered around 30%.
Regarding the increase in the cost of raw materials, the relevant person in charge of Chongqing Beer said that this is a common problem faced by the beer industry. The company has taken a series of measures to reduce the possible impact of fluctuations, such as locking the main raw materials in advance, increasing cost savings, Improve efficiency to deal with overall cost pressures, etc.
China Resources Snowflake
In the face of the uncertainty of the epidemic and the rising prices of raw materials and packaging, China Resources Snow Beer may take measures such as selecting reasonable reserves and implementing off-peak procurement.

In addition, due to the increase in raw material prices, labor costs, and transportation costs, the cost of products has increased significantly. From January 1, 2022, China Resources Snow Beer will increase the price of Snow series products.
Anheuser-Busch InBev
AB InBev is currently facing rising raw material costs in some of its biggest markets and said it plans to raise prices based on inflation. Anheuser-Busch InBev executives say the company has learned to transform faster during the Covid-19 pandemic and grow at different speeds at the same time.
Yanjing Beer
Regarding the sharp rise in the prices of raw materials such as wheat, the relevant person in charge of Yanjing Beer said that Yanjing Beer has not received any notice of product price increase by using futures purchases to reduce the possible impact on costs.
heineken beer
Heineken has warned that it is facing the worst inflationary pressures in nearly a decade and that consumers may also reduce beer consumption due to higher living costs, threatening the entire beer industry’s recovery from the epidemic.

Heineken said it will offset rising raw material and energy costs through price increases.
Carlsberg
With the same attitude as Heineken, Carlsberg CEO Cees’t Hart also said that because of the impact of the epidemic last year and other factors, the cost increase was very significant, and the goal was to increase the sales revenue per hectoliter of beer. to offset this cost, but some uncertainty remains.
Pearl River Beer
Since last year, the entire industry has been faced with rising raw materials. Pearl River Beer said that it will make preparations in advance, and will also do a good job in cost reduction and efficiency improvement and procurement management to minimize the impact of materials as much as possible. Pearl River Beer has no product price increase plan for the time being, but the above measures are also a way to optimize and increase revenue for Pearl River Beer.