Despite the relative foreign exchange stability in the last two weeks, rising operating costs, skyrocketing prices of raw materials, high energy and transport costs amongst other issues have seen more local brewers increase the cost of goods.

Guinness Nigeria Plc will, from tomorrow, implement new prices across major product lines. Earlier, International Breweries (ABInBev), increased all product lines while Nigerian Breweries had earlier reviewed its prices, citing the high cost of production.

In a memo to its partners, the acting Commercial Director for Guinness Nigeria, Olusanya Adesanya, blamed the increase on prevailing economic realities, which have impacted significantly on the costs of production materials and the cost of doing business.

Adding that the increase is on select SKUs in their beer and MSS categories, he said it takes effect immediately. Under the beer category, affected drinks include stouts (Guinness and Guinness Smooth), malts (Malta Guinness and Dubic Malt) and ready-to-drink spirits (Smirnoff Ice and Orijin).

Under the mainstream spirits, affected drinks include Orijin Bitters and Herbal Gin, Gordon’s Pink Berry, Sunset Orange and Moringa Citrus, Smirnoff X1 Smooth and Choco and Captain Morgan.

In a similar memo to distributors, bulk-breakers and retailers, District Manager for the West, ABInBev, Hans Darfour, said the company is forced to increase prices due to escalating costs of operations.

In a price check of some of the affected products, small stout that retailed for about N500 now goes for between N800-900, an 80 per cent increase. Big Stout retails for N1000 from N700, a 43 per cent increase while Castle Lite retails for N800 from N500, showing a 60 per cent increase. Trophy is showing a 40 per cent increase, moving to N700 from N500 while Gulder retails for N1000 from N600, a 67 per cent increase. Malta Guinness can that retailed for N300 now goes for N400, a 34 per cent increase.

The increase is coming on the heels of industry experts warning that manufacturers were labouring under the burden of escalating production costs, rising costs of raw materials, high transport and rising energy costs amongst other issues which are squeezing profit margins for brewers.

The third quarter of last year showed that brewers’ income costs stood at almost 70 per cent of total revenue with all of them declaring losses after tax. The firms which included international breweries, Guinness Nigeria, Champion Breweries and Nigerian Breweries recorded cumulative input costs of N441.56 billion after the third quarter of last year from N401.87 billion in the same period in 2022.

ABInBev saw its input cost gulp 79 per cent of its total revenue, Guinness (69.5 per cent), Champion Breweries (69.3 per cent) and Nigerian Breweries (62 per cent).

Nigerian Breweries recorded the highest input cost of N249.24 billion from N238.92 billion in the same period of 2022. International Breweries’ input cost grew to N145.13 billion from N123.16 billion in the same period of 2022 while Guinness Nigeria’s input cost stood at N41.4 billion from N34.61 billion in the same period of 2022.

Prices of essential commodities have continued to uptick despite a relatively stable FX market in the past few weeks, raising questions on the drivers of the prices. At the black market, which many companies use for price setting, Naira has traded slightly above N1600/$ in the past two weeks.