Brewers Face Additional COGS Increases: Rabobank

Even though spot prices for some items are declining, key items remain well above 2021 levels, and brewers will face additional cost of goods sold (COGS) increases, beverage analysts at Rabobank are projecting.

Other challenges facing brewers include:

  • Tight labor market conditions, which combined with higher inflation means employees have leverage and are high motivated to push for higher wages this year;
  • Demand for LNG from a reopening-China and a depleted inventory if European weather goes cold could combine to push energy prices up again in the latter half of 2023, though not to the peak level seen in mid-2022.
  • While spot prices for some inputs are coming down, there is an expectation for a number of input costs to increase further, continuing pressure on COGS in 2023.
  • Though there is a desire to return to low single-digit price increases quickly, especially excess capacity and inventory remains, economists argue that a return to the target 2% inflation that central banks aim for — meaning that industry expectations may need to be adjusted.