PROOF Weekly News Update 1st April

Record price inflation driving up costs across both on- and off-trade.

New data from Kantar indicates grocery price inflation is now at its highest level in ten years, reaching 5.2% in March 2022. This has prompted consumers to increasingly turn to own label products, which are typically cheaper than branded options.

In the on-trade, brewers Marston’s and Adnams are the latest to announce price rises. Marston’s said its pints will go up by 45p in some parts of the country. For perspective, the average price of a pint in Birmingham 5 years ago was ￡2.87 – its now ￡4.46. Londoners will be hit the hardest with pint prices in the city rising up to around the ￡7 mark in some cases. New research has also shown the average cost of a pint of cider has risen by 12p to ￡4.03 vs the previous year.

Adnams says beer prices will be more expensive by Christmas, as the Ukrainian conflict has caused a 30% spike in Barley prices vs last year (despite sourcing from the UK). Ukraine accounts for just under a fifth of global barley exports, which is a key ingredient in the brewing process. While many brewers may already have enough stocks of the raw material, they may face further price rises when buying later in the year.

Source: Kantar, The Drinks Business, The Morning Advertiser, Propel

India’s record harvest may ease war’s impact on wheat.

We previously reported on concerns regarding cereal exports from Russia and Ukraine that may affect grain-based drink production. In positive news, India’s farmers are looking to benefit from a fifth consecutive record harvest; producing an exportable surplus that will make them the world’s top producer and exporter of wheat, after China, in 2022-23.

While India will mainly export for food in Asia, Africa and the Middle East, some may be made available for drinks producers in the west, who could also benefit from global prices of wheat being protected from further price escalation as a result.

Source: Bloomberg, Economic Times, India Times

More international brewers exit Russia.

Following InBev’s decision to suspend the production and sale of the Budweiser portfolio in Russia, both Heineken and Carlsberg announced this week that they would offload current operations and exit Russia as the country’s invasion of Ukraine continues.

Following the announcement, share prices rose, but the exit will cost; while Heineken attribute 2% of their global revenue to Russia, Carlsberg is more integrated with a 27% share of the local market via ownership of homegrown Baltika, with combined sales of their own portfolio accounting for circa 20% of global revenue. Both companies will continue to pay Russian staff until offloading and will suffer from a non-cash impairment loss; Heineken’s at €400m and Carlsberg’s stated as ‘substantial’ by the company.

Source: Reuters, Financial Times, Just Drinks

Pernod Ricard appointed spirits-pouring partner for BOXPARK.

BOXPARK has announced Pernod Ricard as its official spirits-pouring partner in all three venues (Shoreditch, Wembley and Croydon) until June 2024. Following a number of successful Jameson Orange activations last year, Absolut vodka, Havana Club rum and Beefeater gin will join Jameson as the spirits available to customers at BOXPARK. The partnership intends to create content and build relationships with emerging talent and artists in order to hold immersive events, live gigs, DJ sets and drink events.

As consumers look to make more of their social moments, on-trade venues are stepping up their events to create memorable experiences, in line with PROOF’s ‘Experience it All’ trend. In addition, Pernod Ricard has pledged to invest in ‘aspirational brands’ by putting culture, people and sustainability at the centre of its business. This therefore adheres to the ‘Glassbox Brands’ trend whereby consumers are actively seeking out brands that conduct themselves in an authentic way which demonstrates they are ‘living the pledges they make’.?Contact PROOF ?to find out how best to apply the ‘Glassbox Brands’ and ‘Experience It All’ trends.

Source: Spirits Business, Pernod Ricard, Trendwatching

Investments, Mergers & Acquisitions

• Brewer Greene King is to introduce four premium beers to its portfolio; a dry hopped lager and a session IPA will be part of the permanent range; a west coast IPA and an oatmeal stout will be limited edition brews.
• The number of competitive socialising companies is set to increase as Oche applies for permission to open its first UK location in Edinburgh, whilst Alcotraz, a theatrical bar concept based on popular prison stories, opens its?fourth site in Liverpool.
• SushiDog is to open three new locations in London by June, with expansion to continue over the next two years.
• Three rural pubs in Wiltshire, Cornwall and Leicestershire have been ‘saved’ after receiving around ￡240k each from the Government’s ‘Levelling Up’ fund.
• Prospect Pubs and Bars group has opened its first site in London, with plans to open a further five UK sites in 2022.

Sources: Big Hospitality, Propel, CGA

For information on the PROOF Insight and BrewBroker partnership please go to:?Connecting Brewers with Breweries, Brands to Beers (brewbroker.com). ?Download the Pint Please app on?Google Play ?or?App Store.