PRICES: The world’s largest beer festival, Munich’s Oktoberfest, kicks off Saturday. Attendees will face an average 6.1% beer price increase vs 2022. They are the lucky ones. EU beer prices are up 11.4% the past year, US prices 12.5%, and a pint of lager in UK now averages £4.58, a 12% jump. These wallet-busting hikes are near double the increase in US, EU and UK inflation. And come even as our index of beer commodity input prices fell 5%. The big beer producers are now seeing the limits of their multi-year premiumisation strategy (see chart), as consumers push back and drink less. And investors respond by derating their premium stock market valuations.
COMMODITIES: Our equal-weight index of six commodities used to make and transport beer, from barley, wheat, malt, and rice to aluminum and gasoline, is down by 26% from its mid-2022 high (see chart). Only rice prices are higher since then, driven by rebounding Asian demand and India supply restrictions. Whilst gasoline prices have surged more recently, as OPEC+ has extended its deep production cuts and driving demand has been better than initially feared.
BREWERS: Shares of the worlds top brewers Anheuser-Busch (BUD) and Heineken (HEIA.NV) have fallen this year, and an index of the 20 largest significantly lagged the global stocks rally. Consumers are now pushing back against big price rises and showing the limits to the industry’s multi-year ‘premiumisation’ drive. Investors have responded by derating the sector. BUD drove Q2 prices up 9% but volumes fell 1.4%. Heineken’s 1H prices surged 11.8% but with volumes down 5.4%. Exceptions that have been rewarded by investors are those, like Mexican importer Constellation Brands (STZ) and Molson Coors (TAP), able to show continued volume growth.
All data, figures & charts are valid as of 13/09/2023.