Liquor price hikes to be passed onto consumers

New Zealand’s restaurants and bars are growing tired of having to mediate the void between local consumers and price hikes from major breweries, saying they can do nothing more than pass on the increasing costs to drinkers.

According to Hospitality New Zealand, many of these small businesses are able to deal with the capacity to absorb the latest price hikes from the country’s two major alcohol producers.

DB is raising their price of RTDs (ready-to-drinks) by 4%, beer and cider by 3%, and tap products by 1%, which will come into effect as of March.

Lion Breweries will also be following the price hike trend when they alerted customers last week that it would be raising the price of tap beers by 1.5%, although the cost of their wines, spirits and RTDs will remain untouched.

Association president of Lion Breweries, Adam Cunningham, said that business operators supplying consumers with their beverages will have no option but to try and absorb these price hikes in order for their customers to remain loyal.

“Many operators believe they have no option but to try and absorb these cost increases to ensure their customers remain loyal and this approach is causing them to suffer,” said Mr Cunningham.

“The public just needs to be aware that the cost increase on any product to an operator must be passed on and the industry has certainly had a ‘guts full’ of taking the flak for price increases that we don’t initiate don’t like and are unable to control.”

DB has justified these costs, saying it is itself facing margin pressures, with increased raw material, packaging, production and distribution prices.

According to figures from the latest Statistics New Zealand report, food and drink costs at restaurants and ready-to-eat establishments are already on the rise, with prices up 0.2% in January compared to the month previous.

By comparison, the headline food price index was unchanged in January versus that of December last year. December saw Independent Liquor, a new entrant into the tap beer segment, accused DB of discounting keg prices in order to block its licensed Carlsberg and Kingfisher brands from entering the market.