Guinness Ghana Raises Drinks Prices as Much as 10% as Costs Soar

Guinness Ghana Breweries Ltd., a unit of London-based Diageo Plc (DGE), raised the price of some of its beers and soft drinks by as much as 10 percent to pay for higher utility, transportation and storage costs.

The company, which brews Guinness alongside Star Lager and fizzy fruit juice Alvaro, estimates that sales volumes will fall by about 10 percent in the fiscal year through June 2014 as a result of the rises, Managing Director Peter Ndegwa told reporters today in Ghana’s second-largest city, Kumasi.

“We look at consumers’ ability to afford our brands before making price increases,” Ndegwa said. “We don’t want volumes to decline significantly.”

The company increased the price of non-alcoholic Malta Guinness by 5 percent and Alvaro by 10 percent, he said. The cost of a pint of traditional Irish beverage Guinness was left unchanged.

Ghana’s government increased water tariffs by 52 percent and electricity bills by 79 percent from the beginning of this month, while subsidies on gasoline and diesel were scrapped earlier this year. The cedi has declined 14 percent against the dollar in 2013, the worst performer of 24 African currencies tracked by Bloomberg.

Guinness Ghana is absorbing part of the cost increases and passing the rest on to the consumer, Ndegwa said. The rises are below Ghana’s rate of inflation, which rose to 11.9 percent in September from 11.5 percent in August.

The company introduced a new cassava beer called Ruut Extra in December and is considering the use of other locally-sourced raw materials like maize and sorghum, according to Ndegwa. “Use of these products will mitigate the effect of local currency’s depreciation,” he said.

To contact the reporter on this story: Moses Mozart Dzawu in Accra at mdzawu@bloomberg.net

To contact the editor responsible for this story: Andres R. Martinez at amartinez28@bloomberg.net

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