Brewers are warning of price hikes of up to 70p on a four-pack of beer and £2 on larger multipack formats next year in the wake of increases in the cost of raw materials.
Scottish & Newcastle, Coors Brewers, SABMiller and Anheuser-Busch have been hit by sharp increases in the price of malt, barley, glass and aluminium.
Industry insiders warned that on the back of these, the wholesale price of beer was likely to rise 8%-10% and this would have ramifications for the on-shelf price.
"Similar to all markets that rely on cereal as a key ingredient, the brewing industry is experiencing significant cost rises that will ultimately need to be passed on to the consumer," said David Wigham, portfolio activation director at Coors Brewers.
Brewers would not be able to absorb the costs by themselves, added Mark Gerken, S&N sales MD, off-trade.
"Last year we saw wholesale price increases of about 4%, which was considered significant," he said. "This year it seems the industry may have to face up to double that increase. Given most breweries are already very efficient and have absorbed cost rises so far, it is difficult to see how this level of rise can be swallowed by the supplier base this time round."
The cost of raw materials has soared over the past year. The average price rise for barley rose 38% between 2006 and 2007 and hops, another key ingredient in brewing, have risen in cost by 294% since 2004.
Growing demand for grains for biofuels, extreme weather in key growing areas and a rapidly consolidating market for malt have all been blamed as have poor crops in Europe and Australia following floods and drought respectively.
A rise in global demand from Russia, India and South America, has driven raw material costs up even further, with aluminium rising by £550 per tonne last year and glass manufacturers also reporting higher costs.
n The price of a loaf of bread has gone up for the third time this year, according to The Grocer 33. A Hovis white loaf increased 7.7% from £1.04 to £1.12 this week in Asda, Morrisons, Sainsbury's and Tesco.
See The Grocer 33, p22.