The media and the silly season: let’s talk about raising beer prices

Beer price hikes are a non-issue but this has not stopped Belgian media from making them an issue. For several years now, it’s been like this in Belgium. Preparing for the long summer months, when the business of politics grinds to a halt, hacks will go through their archives, wondering if there is some kind of staple issue that could be taken up again to fill their pages and TV hours with news. What do they invariably discover? The issue of higher beer prices. There may be nothing to this story but this does not prevent journalists from doggedly pursuing it.

Same this year. On 23 July 2012 someone from Brasserie du Bocq, a small brewery from the French-speaking part of Belgium, gave an interview to a national newspaper, saying that they may have to raise beer prices this year because of higher costs – giving the usual favourite explanation (which consumers cannot verify) that barley crops have suffered in the recent rains.

The Belgian hacks sensed a scoop, blissfully ignorant of the fact that in the world’s major barley growing regions weather conditions have actually been quite good with yields and qualities well above average (said the Swiss trader Evergrain on 24 August 2012).

Without any further research, the journalists followed du Bocq’s line of argument and insinuated that all brewers in Belgium could raise prices this November.

Although Belgium’s major brewers AB-InBev and Alken-Maes, who together control about 80 percent of the market, have refrained from responding to the allegation that they will in fact do so, the media would not let go of the story, which again flared up nationwide at the end of August.

We at BRAUWELT International say that in a free economy, where the government does not set prices for certain staples like beer, raising the price of beer each year should be considered normal, yes, normal and legitimate business practice. It’s one means – not the only one, but one among several – to secure a company’s future vis a vis higher cost bases.

Of course, Belgian readers and viewers will remember that this year AB-InBev was the first to raise beer prices by 6 percent in March. Alken-Maes, owned by Heineken, followed suit a few weeks later. Many smaller Belgian brewers raised prices in July. However, several have not raised prices at all this year.

While it is true that between 2006 and 2012 beer prices in Belgium have gone up by about 20 percent, it is equally true that wages and pensions have risen too over this period – something the hacks failed to mention.

One should bear in mind that Belgium is one of the few countries in western Europe that still has an extensive automatic index-linking for setting wages. This means that pay and social security benefits are linked to the consumer price index. Belgium’s measure for wage indexation – the health index – excludes tobacco, alcohol and motor fuels, but it includes home heating oil, gas and electricity, Bloomberg reported. The link is intended to prevent the erosion of purchasing power by inflation.

The interesting aspect to note in this debate is the following: beer prices still seem to stir public emotion. We wonder: why is there no consumer outcry if Coca-Cola raises prices?