BELGIUM: InBev defends price hike in face of impending probe
InBev has insisted it has not abused its dominant position in Belgium after the country's government ordered a probe into the brewer's planned price increases.
The Belgian brewer, which controls 57% of its domestic market, plans to raise prices by almost 3% next month and has blamed rising energy costs and inflation for the move.
However, Belgian Economy Minister Marc Verwilghen has asked the country's competition watchdog to investigate whether InBev is abusing its leadership of the domestic beer market. The impending price hike follows the brewer's decision to increase prices by 3% last summer.
Nevertheless, InBev, which brews brands including Stella Artois, Leffe and Jupiler, said it was "confident" it had followed "all the necessary rules" in its decision to increase prices again.
"This is a normal price evolution, it is not exceptional," an InBev Belgium spokesperson told just-drinks today (19 April).
"However, the fact that it is InBev and the fact that it is beer means that there has been a lot of talk about it. Beer is emotion in Belgium."
The spokesperson said recent price increases in the soft drinks and water categories in Belgium were higher than InBev's planned hike.
She insisted that any move by InBev to raise prices would not automatically hit beer sales in Belgium, despite it controlling over half the market. "We determine prices for wholesalers but we do not determine prices for retailers. Whether other brewers will follow is up to the strategies of those companies."
InBev's move to raise prices in Belgium comes as it plans to axe 165 jobs from its domestic operations and close its historic Hoegaarden brewery.
In February, InBev reported a 15.3% rise in EBITDA to EUR3.3bn (US$4.1bn) for 2005, on the back of a 7.2% increase in revenues to EUR11.6bn. The brewer, the world's biggest in terms of volumes, is also looking to become the most profitable on the planet and is aiming to achieve an EBITDA margin of 30% by the end of next year.
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