The increase in production costs has been blamed for the recently instituted hikes in the prices of beer and aerated drinks by beverage company Banks DIH Ltd.
A press release from the company yesterday said that a recent 10 per cent appreciation of the British pound against the United States dollar has sent costs of malts and sugar to a level the company cannot absorb.
Increases in costs of packaging material, fuel, manpower resources, chemical and concentrates coupled with frequent electricity tariff hikes have combined to impact heavily on production costs.
According to Banks, the shift in consumption from glass to pet products (plastic bottles), affected the unit cost of glass production because of the lower volume needed. Similarly, there was need for heavy investment in new machinery to satisfy demands for ‘pet’ products.
In November 2001, the company reduced prices in order to compete with imported products and retrieve its market share. Beverage importers had then increased their product prices, a move that Banks was averse to at that time.
But with costs continuing to climb, the release said, the company had no alternative but to up its prices. The company’s main competitors also recently increased prices for similar reasons, the release said.
Banks also noted that with its price hike government stood to benefit through additional revenues to the Guyana Revenue Authority (GRA). According to the company, the GRA will on average receive an additional $10 million per month revenue in addition to the $204 million currently payable. This is because the consumption tax payable is based on the selling price of products.
The new suggested retail price for Bank Beer, Malta and Milk Stout is pegged at $115 per bottle, while Guinness is $155 per bottle.
The recommended selling price of the 10 oz glass bottled Coca-Cola, I-Cee, and Fanta is $35, while half litre and one litre Coke and Fanta are $55 and $100 respectively.
Pet (plastic) bottled products Kiddies is recommended for sale at $60, while 20 oz Coke and a 24 oz I-Cee are to retail at $85. One and two litre I-Cee and Coke respectively are recommended for sale at $125 and $250 respectively.
At a recent press briefing, Minister of Tourism, Industry and Commerce, Manzoor Nadir had refuted suggestions from some quarters that price increase instituted by Banks had been as a result of increases in taxes.
According to Nadir, retailers were informing customers that the increases in product prices were as a result of government upping its taxes.
However, he recognised the company’s right to institute price increases as it saw fit, while reiterating that customers should not be misled as to the reasons for the increases.
While noting that the inflation rate for the year had not reached five per cent, he posited that companies instead of attributing blame should look for alternative sources of raw materials. Government, he added, had earlier in the year, reduced consumption taxes on locally manufactured items.