Diageo Whisky Price Review

[William]

Scotch Whisky drinkers could face another hike in the cost of their favourite tipple as Diageo is set to reviews the domestic pricing structure of its whisky brands for the second time this year .

Dometic prices here in the UK could rise due to the the increase in costs in the the past year. These costs, though, make up a relatively small part of producing whisky and areas such as marketing and storage until maturity are far more significant.

Diageo and the other major distillers send more than 90% of their product overseas, where they have been enjoying highly profitable business because of the effects of the weak pound on dollar and euro earnings.

The Scotch Whisky Association says the price of cereals has risen anywhere between 35% and 100% in the past year, while glass bottles have increased by up to 20% and other packaging by around 10%.

News of a potential increase could come as early as Thursday when Diageo chief executive Paul Walsh is expected to disclose that the group has seen a £100 million rise in its costs for items such as grain, energy, glass and packaging over the past year, which analysts expect to have taken the edge off this year's profit growth.

A spokesman commented last week: "As with any business - especially when cost prices are rising significantly - we regularly review our pricing strategy to ensure we are in line with the marketplace, have our cost and profit ratio balanced and can continue to offer customers and consumers brands which are good value. As always, we will continue to give our customers plenty of notice of any planned changes."

Whisky drinkers in the UK have already had to cope with a Diageo price rise in February this year and also the effects of a 9% duty rise in the spring, which raised the tax man's share to £5.98 on a 70 cl bottle (and 28.9p on a standard pub measure) before taking account of VAT.

William

Source: The Sunday Herald

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