Ethiopia: Four out of the five breweries in the country have started making price adjustments on beer

Meta Abo Brewery, Harar Breweries, Bedele Breweries and BGI; four out of the five brewery factories in the country; have started making price adjustments on their beer products following the increment in the prices of malt in the international market, All Africa posted on February 6.

Well over one million quintals of barley, one of the major ingredients for the production of malt is required for the overall production capacity of beer, which currently stands at 3.5 million hectoliter per annum in Ethiopia.

Assela Malt Factory, established in 1984 with a capita of 9.2 million Br is the sole producer of the raw material used in the making of beer in Ethiopia. The Factory, which is located 167Km southeast of Addis Abeba, has failed to satisfy the factories' demand. The reason for the shortages began when farmers in the area, which supplied barley, decided to look elsewhere for business, as they claimed that AMF was not paying them their due money on time.

This led to Assela not providing Dashen Brewery Factory and BGI with its product; therefore leading to their being forced to depend on the international market to attain the raw material that costs 750Br per quintal; 250Br more that of the local market.

As a result, Meta Abo Brewery, one of the three state owned factories, located in Sebeta town, on the outskirts of Addis Abeba and established a little over 40 years ago; as well as BGI, which was established in 1998 and produces well known branded beers, such as Saint George, Castle and Bati, both increased the prices on their 30 liters draft barrel from 121Br to 135Br as of January 2007.

Similarly, Bedele Brewery Factory, established in November 1993, and situated approximately 483Km southwest of Addis Abeba, in the Oromia Regional State, has increased the prices on a box holding 24 of three types of its product beers from five Birr to seven Birr as of January 23, 2007. The company is designed to produce 250,000hcl of beer annually.

Harar Brewery, which finished its 80 million Birr expansion work two months ago, in Harar 526Km east of Addis Ababa, also made a 6.25 Br increment per box, General Manager of the factory Juneydi Basha told Fortune.

Sources from one of the breweries management told Fortune that this is the first time that all price adjustments by the factories were made simultaneously. They said that although previous cases of fuel price adjustments have a seemingly unified move such as this one has never been witnessed.

Following the price amendments, hotels, recreational centers and bars made price increases in the beer products they offer.

Dereje Yaregal, a beer drinker in a bar in the Kazanchis area told Fortune that since the price of a pint of draft has increased from 1.50Br to 1.75Br, he will either resort to decreasing his level of consumption or stick to traditional liquor, for he will not afford it, due to his small income.

Grocery owners though have a different outlook on the matter as they say that the increase in the prices of beer does not affect the existing demand. They told Fortune that the supply of the products is the only problem they are facing.

According to an expert from the sector, the demand for beer in Ethiopia is still on the rise, which leads to the inability of the five breweries to meet it.

"There is enough market to accommodate at least three more factories of similar standards. However prices will keep on increasing as long as malt production grows," an expert in the sector told Fortune. "The government has to do something about to fix it."

Dashen Brewery is the only factory that has not increased its beer prices. Sources from the Dashen told Fortune that the reason price adjustments have not been made on their products is because no management decision has been reached on the matter. They say that so far, they do not see the point in increasing their beer prices despite the fact that they are importing malt.

Officials from one of the other factories claim that it is only a matter of time before, Dashen steps in-line in increasing its product prices.

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