Beer Duopoly Shakes Up Draft Prices
Estonia's mass producers of beers, Saku and A. Le Coq, shot up the retail price of draught beer by equal amounts on Wednesday.
Bottled beer only rose by one cent, compensating for the new alcohol excise. But the price of draught rose by 15 cents per liter, including excise duty and VAT, reported Äripäev.
Notably, the prices of each brewery's elite brands rose by exactly 11.3 cents per liter.
“Although it might seem to the public that Saku and A.Le Coq are huge competitors who fight over everything, there are certain areas where they have always very comfortably come to agreements,” said Aare Hallop, owner of the Vana Villem pub chain.
But Tarmo Noob, head of A. Le Coq, justified the hike, saying the cost of malt increased by 73 percent last year on the world market. To preserve profitability, breweries should have raised the price of all beers by 5 percent, something they can't do right now because of competition, he said.
Furthermore, draught beer is more costly for breweries to produce and only makes up about 3 to 4 percent of total sales for A. Le Coq.
And the price hike won't translate directly into the cost for restaurants and pubs because breweries pay marketing fees and give discounts, Noob argued.
But restaurant and pub owners have said the price rise came as an unpleasant surprise that they would initially have to swallow because they are not ready to raise prices yet. Peeter Jalakas, the owner of Von Krahl club and restaurants, said he may even need to consider getting rid of his draught selection altogether.
Ott Tammik