Craft brewery tries to circumvent increased costs

Impacted by high-dollar, the craft breweries participating in the Mondial de la Bière-international event in the sector, starting from the day 19 in Rio, are holding the margin and betting on the chance to replace the imported brands, suffering to the same extent. The main concern is to prevent the consumer be sure to try the premium products and return to traditional beers, which did not occur until now.
While the overall market shrank about beers of 2% this year, craft or special versions maintain growth rate around 30% on average, according to industry associations.
More than 80% of the cost of production of the craft beers go for malt, hops and yeast-all imported. With the devaluation of the Brazilian real in recent months, producers estimate in 50% the ultimate impact of the exchange rate on the price of the inputs. The costs have climbed with the high tax burden and items such as energy and water.
The brands try to not go over the final price any increased costs. In the Mondial, 200 ml mug should get out, on average, 25% more expensive than in last year's event, between $ 10 and $ 12, compared to r $ 8 and $ 10 in 2014. To Victor Montenegro, Business Director of Fagga, responsible for organisation of the Mondial de La Bière, this is possible because the beer is coming to the event without the addition of point of sale and distributors.
Assume part of distribution was one of the solutions found by the Classical Mix, brewery inside the River, to soften the impact of rising costs. The company has already made two adjustments this year, but understood that the prices would be prohibitive if you did the third. "We are looking for alternatives. Associate the second rate increase a bonus. The consumer pays more, but take a bonus in product ", says the company's partner, Marta Ribeiro.
Renato Estrella, a partner in the brewery Fraga, says the impact of the high-dollar total cost was 40%. As the company also opted to reduce the profit margin, return on investment in the factory, before expected for seven years, will not occur before the age of ten. "What frightens us is the difficulty that we have to grow up," says Estrella, which advocates for the inclusion of the sector in the simple tax regime to encourage small business as a way to improve the situation of the sector.
To face the adverse scenario, the factory-which has the capacity to produce 5 million pounds and was inaugurated two years ago-is being leased to the so-called "Gypsies", which has no own production structure. "We made a 20% adjustment and reduce our profit margin by half. If repassássemos any increase to the consumer, the price would be impossible, "says Estrella. He invested about $ 1 million in factory in Vargem Grande along with three other partners.
Despite the difficulties, the sector's growth is evident in the numbers of events such as the Mondial De La Bière, a French franchise, brought to the river by Fagga Eventos right. According to the Director of Fagga, the number of breweries jumped from 50 in 2013, to 126 in this year. Will be 800 labels exposed, against 600 two years ago. Only in Rio, the number of microbreweries jumped from 7 to 48.
"Craft beer, in General, have local chain. This is an international trend that is increasing in Brazil because of the tax burden ", says the Executive, who expects 175 thousand people in the four-day event. In 2013, were 40 thousand visitors.