A spokesperson for Diageo has announced that the price of their draught drinks is set to increase again. Diageo are a multinational beverage company most known for their iconic stout Guinness as well as some popular lagers like Hophouse, Carlsberg and Harp. However, Guinness is by far the most popular alcoholic drink in Ireland and this price hike will likely hurt hospitality businesses across the country as they struggle to push through the January slump.
According to a Diageo spokesperson the price of Guinness as it is sold wholesale to retailers is set to increase by 7 cent per pint while Guinness zero will see an increase of 10 cent per pint. This decision will come into effect on the 2nd of February and will likely force pubs to increase their prices of their Diageo pints by about 10-20 cent across the board.
The decision to increase prices comes as Diageo endures declining sales growth and diminishing share prices that have plagued the company for the last five years.This decline has been felt almost all over the alcoholic beverage industry as companies struggle to make their products appeal to a more health-conscious generation of consumers. Generation Z in particular are drinking less than previous generations as cost of living rises and teetotalism is seen as both a healthier and cheaper lifestyle.
One major threat that has taken the industry by storm in recent years and has caused investors to lose confidence in the beverage trade is the popularity of weight-loss drugs like Mounjaro. These drugs, known officially as semaglutides or GLP-1’s, are shown to reduce cravings for alcohol and other calorific drinks. An estimated 15 million Americans take a semaglutide drug to curb their weight gain and Ireland is seemingly not too far behind as branded semaglutides like Mounjaro and WeGovy have become available in pharmacies across the country to anyone with a private prescription. As a result, several stock pickers and analysts such as Terry Smith have offloaded their shares in Diageo, haemorrhaging confidence in the company.
Another challenge facing Diageo is the rising cost of production and particularly the price of raw materials. A stout like Guinness is made with a combination of barley, water, hops and yeast. Due to factors such as drought, inflation and the war in Russia and Ukraine that has caused global supply chain issues, the price of Barley has only gone up, meaning Diageo must increase their prices to maintain profits.
These issues are just some of the reasons behind Diageo’s controversial price increase. It is the third price increase Diageo has implemented in Ireland in just the past fourteen months. Many publicans have spoken out against these rising prices with the Vintners Federation of Ireland calling it a “critical hit to an industry on the brink”.
