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Date Published: 02/11/2022

Sobering production costs send beer prices through the roof in Murcia Region

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Murcian brewery Estrella de Levante has increased its prices twice this year for the first time ever

Sobering production costs send beer prices through the roof in Murcia Region

A sobering mix of soaring energy bills, a shortage of cereals and other raw material price hikes has seen the cost of beer production hit dizzying heights in the Region of Murcia.

A price storm may be brewing with the Bar Association of the regional hotel and catering employers' association Hoytú warning that the price of a barrel of beer has already risen by 20% this year and currently costs between 125 and 130 euros.

A 30% rise in the cost of cereals, as the country experiences a shortage due to the war in the Ukraine, accompanied by skyrocketing costs for fuel and glass and aluminum used in packaging, mean that Murcian brewery Estrella de Levante has been forced to increase beer prices twice so far this year for the first time in its history.

The company assures it has "worked hard" to make these increases, before and after the summer, as "discreet as possible", but on average, the two hikes have lifted the basic retail price by 8%.

And the situation isn't exclusive to Murcia, as main brewers across the country have had to up prices due to production costs.

Traditionally, in times of crisis, beer consumption grows, but this has not been the case this year. In terms of sales, Estrella de Levante is currently five points behind its figures for 2019, prior to the pandemic, "a much worse situation than expected".

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Sales forecasts at the beginning of the year predicted a return to normality with the lifting of all Covid restrictions. However, according to Estrella de Levante, this hasn't panned out due to the closure of 10% of bars and a "cautious" hotel and catering sector wary of making large purchases due to the increase in costs.

"Where a bar used to buy 12 kegs to try to sell them all, now it might buy eight, and that difference of one keg here and one keg there has had a detrimental impact on growth which was not what was expected," said a spokesperson for Estrella de Levante who described the situation as a "halt in growth".

The figures look far more favourable when compared to 2020 and 2021, when 70% of bars, hotels and leisure venues were closed.

For the most part, punters remain merrily unaffected by extortionate and unexpected hikes in bars, as the majority of establishments in the Region have decided to assume a large part of the costs themselves rather pass on the current economic scenario to the customer. But there has been a progressive rise over the last 12 few months in some areas, resulting in the average pint going up by as much as 50 cents.

"It's very difficult to sell beer at one euro, as before, otherwise the accounts don't work out," explained Paco Torres, manager of the Punta del Sureste bar in the centre of Murcia.

It's the craft beer sector that is particularly hard hit by the increase in costs. El Cantero's manager, Ginés García, explained that the cost of glass for bottles has gone up by 20%, and the price of malted cereals has risen by 30%.

"Everything has gone up, cardboard, plates, labels... If we add to this the cost of diesel and other overheads, it's devastating."

However, he assured that "by no means" are all of these increases reflected in the final price: "Even if the price of a bottle has gone up by between 5 and 10%, we can't increase prices any more, basically we have already lost customers because of the minimal rise implemented."

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