Namibian Breweries Limited (NBL) says its assessing the possibility of a product price hike, amid a surge in ingredients, energy and transport costs, a position attributed to the Russia, Ukraine conflict.
The firm, which sells brands such as Windhoek Lager, Tafel Lager, Camelthorn and Hansa Draught, told The Brief the price of raw barley, which is processed into its major ingredient, malt, has risen sharply due to the on-going Russia, Ukraine conflict.
“With the current situation in Ukraine, the raw barley prices jumped another 150EUR-170EUR per ton overnight. At present it is also not yet possible to determine pricing for the crop 2022 harvest. What is of further concern is the significant impact which the increase in crude and energy costs has on European manufacturers. The malting process in itself consumes a significant amount of energy which adds to the risk of further price increases due to the same. Further to this, shipping lines have already introduced a fee adjustment which will further increase the costs for transport and shipping,” the company said.
“At this stage NBL will continue to carefully monitor the impact of rising commodity prices to assess the need for any future price adjustment of its products/brands.It is anticipated that the entire world will see significant increases in input costs for food and raw materials that producers in general will not be able to absorb. The price crisis already hit markets in East-African countries that used to import wheat from Ukraine.”
Through the malting process, raw barley is converted into malt, the raw material which NBL requires for the brewing process, being the source of the sugars (principally maltose), which are fermented into beer.
Although NBL does not source its barley from Ukraine, demand for malt has surged significantly worldwide resulting in high prices.
NBL said the uncertainty about the length and impact of the war has created volatility in markets and thus driving price increases.
“At the current moment NBL does have sufficient malt supply with increases in costs remaining a risk,” the company said.
The brewer said its operations were yet to feel the impact of supply chain disruptions, except for fuel and energy.
“At the current moment we have enough malt to service the Namibian demand and to not disappoint our consumers.
“We have long standing relationships with our malt suppliers and shipping lines. NBL is producing beer in accordance with the Reinheitsgebot (German Purity Law), thus there can’t be any shortcuts taken in the production process of our world class beers. We thus need our raw materials to be of exceptional quality. This means we can’t change our source of supply easily. Our supplier relationship management with all our business partners, local and abroad has always been a priority. However, there is no doubt that the inbound supply chain is under pressure.”
