Plzensky Prazdroj Fights for Czech Raw Materials

Shortage of barley and hops is pushing beer prices up.

The European market has become a battlefield where brewers are fighting to obtain sufficient quantity and quality of barley and hops to meet their brewing requirements. The price war for Czech barley and hops is pushing the prices up to unsustainable levels. Malted barley constitutes a major part of the production costs of beer. The dramatic situation surrounding these raw materials markets will force a beer price increase this year.

“I don’t remember any such dramatic cost escalation as that which we are experiencing this year. A current price of ton of the Czech malting barley is approaching double the last year’s price.  Our brands are associated with Czech-grown ingredients of the finest quality. That means, we have to work within the current market prices, since compromising quality is out of question for Plzensky Prazdroj“, says Mike Short, Chairman of the Board of Directors and Managing Director of Plzensky Prazdroj.
 
As the prices of raw materials have been going up everywhere in Europe, those brewers and maltsters who use imported materials are facing similar pressures.

Barely price per ton – base

Prazdroj typically reviews the prices of its products at the beginning of every year. This extraordinary situation is forcing Prazdroj to accelerate its normal pricing process by pulling forward its 2008 increase into the autumn of this year. Additionally, the company concedes that there remains the prospect of further price increases in 2008 should commodity prices continue their rapid increase.

“We have thoroughly considered our options but the situation is unsustainable. To maintain current beer prices, any brewer would have to compromise quality. I would be shocked if the current situation in raw materials doesn’t have a similar impact on beer prices right across Europe”, says Short.

The price increase on Prazdroj’s products is most likely to come in November and is expected to impact prices of all Prazdroj brands. On average, prices are expected to go up by 6 to 8 percent.

Contact:
Marek Hlavica
Corporate communications manager, Plzensky Prazdroj
602 373 196

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• With total sales of more than 10.7 million hectolitres in the calendar year 2006 (including licensed production abroad) and exports to more than 50 countries throughout the world, Plzensky Prazdroj, a. s., is the leading beer producer in the region and the largest exporter of Czech beer
• Plzensky Prazdroj, a. s., is a member of the global group SABMiller plc. Pilsner Urquell is the international flagship of the portfolio of SABMiller brands Plzensky Prazdroj, a. s.
• SABMiller, plc, is one of the world’s largest brewers with brewing interests or distribution agreements in over 60 countries across six continents. The SABMiller brand portfolio consists of international brands such as Miller Genuine Draft, Peroni Nastro Azzurro and Pilsner Urquell, as well as of almost 200 other successful regional and national brands. Outside the U.S., SABMiller is one of the world’s largest producers and distributors of Coca-Cola products. In the financial year ending on 31 March 2007 the Company showed revenues of USD 18.620bn, and pre-tax profits in the amount of USD 3.591bn.

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