Three major Czech breweries announce price hops: Pub goers will feel it from next year

The nation's leading beer breweries, including Plzeňský Prazdroj, Family Brewery Bernard, and Budějovický Budvar, have all recently announced plans to raise their production prices, which will affect consumers in Czechia. While these price increases are primarily attributed to the escalating costs of raw materials, packaging, and rising wages, additional factors are set to exacerbate the situation.

Plzeňský Prazdroj initiated the trend by announcing a nearly 6–percent price hike in most of its products starting in October, according to E15.cz. Budějovický Budvar, on the other hand, plans to follow suit with price increases ranging from 5 to 8 percent in November or December. The brewery cites inflation, which neared 20 percent in 2022, compared to an initial projection of only 10 percent, as the cause of the price hike.

Family Brewery Bernard, another renowned brewery, will increase the price of beer supplied to restaurants and pubs by 5.5 percent in mid-October. This move is a response to the escalating production costs, particularly those associated with energy and packaging materials. Fortunately, the price increase will not affect the delivery of Bernard beer to stores.

Smaller breweries are not exempt from these challenges, with many considering slight price increases from November onwards. Pavel Palouš, brewer of Prague's Cobolis brewery, acknowledges the tough road ahead for smaller players in the industry.

However, the impending price surge doesn't end with these brewery adjustments. If the government's cost-cutting measures take effect as planned in January, the basic 21-percent value-added tax (VAT) rate will be reinstated on draft beer, replacing the 10-percent rate implemented during the Covid-19 pandemic. This change is set to impact pubs significantly, potentially leading to double taxation on a single pint of beer. This shift in pricing dynamics could deter many consumers.

Given that beer is one of pubs' lowest-margin products, it is unlikely that they will be able to absorb a significant portion of the VAT increase. Thus, the majority of this increase is expected to be passed on to restaurant customers, potentially driving the cost of a pint of beer beyond CZK 70 next year.

It's worth noting that the increase in beer prices is not directly tied to the cost of raw materials such as barley and hops, which make up only a small fraction of the final product's price. Instead, it primarily stems from economic factors and government taxation policies.

As beer prices continue to rise in the Czech Republic due to various economic factors and taxation policies, consumers and the hospitality industry will face financial challenges in the near future. Experts suggest that the government should reconsider its approach to alcohol taxation, favoring small producers and implementing excise tax based on alcohol content to generate revenue while encouraging responsible consumption.