E-Malt.com News article: Uganda: Nile Breweries implementing price increase ‘well below inflation’

Against the backdrop of a depreciating Shilling and year-on-year headline inflation of 18.7% in July 2011, according to the Uganda Bureau of Statistics, beer maker Nile Breweries Limited announced on August, 1 it was making a price increase which was well below inflation.

Through cost management and leveraging scale efficiencies, the average weighted price increase would be 12.95 %, a company statement said.

The statement said the increase was necessary as a result of increases in input, operating and financing costs.

"The depreciation in the exchange rate has resulted in cost increases for the business in packaging containers as well as raw materials like imported malt. We have also experienced a sharp increase in fuel costs in relation to our furnace oil and transport for distribution. Transport is a significant cost driver in our business due to the bulky nature of beer", said the Nile Breweries Managing Director, Nick Jenkinson.

Nonetheless, the Nile Breweries statement stressed that the increase in beer pricing would not be uniform across the portfolio of company brands.

"Our brands have different amounts of local and foreign raw material inputs; it is only fair that the increases reflect this reality," said Onapito Ekomoloit, the Corporate Affairs Director Nile Breweries.

As a result, the Value for money Brands (Eagle Extra and Eagle Lager), with 75% local raw material inputs, will have the lowest weighted increase, which is a great result for these consumers as the increase on their favourite drink is the lowest in the portfolio, said the statement.

The modest price increase affects the mainstream brands, Nile Special and Club Pilsener, economy brands Eagle Extra & Eagle Lager, as well as Premium brands Nile Gold, Castle Milk Stout, Redd's, Castle Lite, and imported premium brands Castle Lager and Grolsch.

Nile Breweries went on to state that they hoped that the other players in the channel would show restraint and also only take moderate increases so that consumers could still get their favourite brands at the recommended retail price.


03 August, 2011