Cost inflation has been a major issue for brewers since the start of 2021, especially in Europe. Higher commodity prices drove inflation initially, but wage inflation has become a more prominent driver recently. We modeled the cost of goods sold – COGS – for mainstream beer in the EU, the US, and China and conclude that pressure is abating, but labor shortages prevent deflation. We also looked at reported COGS, which lag spot market prices. Especially in Europe, brewers are likely to have entered contracts and hedges in 2022 at levels above current spot prices, but these contracts are slowly running off, leaving room for lower costs as new contracts are negotiated.Read more
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