Rising Costs and the Future of Beer Consumption in the Czech Republic

In recent weeks, the price of the most beloved alcoholic beverage in the Czech Republic, beer, has risen. This upward trend has led to an increasing number of beer enthusiasts turning to bottles and cans instead of enjoying their favorite brew on tap. While the consumption ratio was once evenly split between tap and packaged beer in 2010, it has now dwindled to only a third of the total restaurant consumption, jeopardizing traditional pubs.

The reasons behind this shift can be attributed to the impact of the COVID-19 pandemic, current high inflation rates, and the worsening economic situation of households, as confirmed by Natálie Štrbáková, spokesperson for the Czech Brewers and Maltsters Union. According to data from the Czech Statistical Office, in September, a half-liter of beer cost an average of 12.41 korunas in stores and 54 korunas in restaurants. The price increase results from higher production costs, including wages, packaging, noble metals necessary for brewing technology, and increased taxation. Agricultural analyst Petr Havel explained that even though prices of ingredients such as barley and hops have sometimes decreased, they have had minimal impact on overall costs.

Several major breweries have recently announced price hikes, with others planning to follow suit. The most significant player in the market, Plzeňský Prazdroj, has raised prices by nearly six percent for most of its products since October. Roman Trzaskalik, the business director, stated that the price increase was a response to rising input costs, including brewing technologies provided to pubs and increasing energy prices. However, the price hike remained below the inflation rate.

Budějovický Budvar, known for its famous Budweiser beer, plans to raise prices by five to eight percent by the end of the year, with draught beer increasing by one koruna and packaged beer by up to two korunas. Bernard Family Brewery from Humpolec also intends to raise prices in October by approximately one koruna per beer delivered to restaurants, while the prices of packaged beer in stores will remain unchanged. According to spokesperson Radek Tulis, the reason behind these adjustments is the increase in production costs, particularly energy and packaging.

However, there are exceptions to this trend. Svijany Brewery, for example, raised prices in May but has kept them steady ever since. Vratislav Žitka, the business director, confirmed they have no plans to increase costs in the coming months.

The rising beer costs have also impacted those who prefer craft and microbreweries. “In February, we were forced to increase our prices by six percent. Our specialty beers now range from 30 to 90 korunas,” said Ladislav Vrtiš, co-owner of the craft brewery Raven. Microbreweries currently account for approximately 2.5 percent of the overall beer production in the Czech Republic.

While it is common for beer prices to rise during the autumn season, this year’s significant increase in production costs has been notable. Analyst Petr Havel warned that these price hikes may be a preparation for tax changes that will come into effect in January. The cost of draught beer will rise from ten to twenty-one percent with the implementation of VAT changes, which will substantially impact many restaurants.

“We plan to increase prices by a few korunas shortly. Similarly, we anticipate further price increases after the New Year,” stated Samuel Semjan, the operations manager of Lokál Dlouhá in Prague.

Rural pubs, where beer is the main attraction and customers have less disposable income, will face the most significant challenges. According to Václav Stárek, President of the Association of Hotels and Restaurants, every increase in beer prices negatively affects demand, and restaurants cannot subsidize it. With a purchasing price of 30 korunas per half-liter and a selling price of 50 korunas, restaurateurs can expect a meager profit margin after deducting costs.

This recent surge in beer prices raises concerns about the future landscape of beer consumption in the Czech Republic. As breweries grapple with rising costs and the impact of economic factors, it remains to be seen how this will affect the long-standing tradition of enjoying a cold pint at the local pub.