As Chinese Beer Prices Surge, CPI Is Set To Pass 6%; Here Comes Shrinkage

Tyler Durden's picture

Yesterday we reported that China just hiked its fuel prices for only the second time in 2011. Now, again courtesy of Business China, we find that something far more important to the Chinese population is about to surge in price: beer. "The National Development and Reform Commission (NDRC), China’s top economic planner, has hauled in representatives from China’s four largest beer makers (China Resources Snow Breweries Co. Ltd., Tsingtao Brewery Co. Ltd., Beijing Yanjing Brewery Co. Ltd. and the China unit of Belgian Anheuser-Busch InBev NV ) for talks over their price hikes, as it looks to tackle public concerns over soaring inflation. " Since February, the cost of beer production has risen by RMB 94 per ton, which explains the beer makers’ unanimous price hikes,” the person said. Since January, CR Snow Breweries, China’s largest brewer by volume, has raised prices by more than 10% in Sichuan, Liaoning and Anhui provinces, where it enjoys a dominant position in the market. Tsingtao Brewery also hiked prices of several products in the following months by an average of 10%, the company announced earlier." This follows news from the China Securities Journal that Chinese CPI, which recently dipped again below 5%, is about to have a breakaway month in March. "Chinese consumer prices are likely to rise more
than 5% year-on-year in each month in the second quarter and the
inflation rate may even surpass 6% in some months,
the official China
Securities Journal warned in a front page editorial published Wednesday." And while energy is energy is a major component of Chinese CPI, it is food that is the main variable: as was discussed previously on Zero Hedge, whereas food is merely 7.8% of total CPI, in China it is about 30% (this is before the recent CPI weighting adjustment). Which means a desperate China is now forced to resort to that ultimately last ditch attempt at covering surging prices- Shrinkage "Resigned to rising raw materials prices, brewers are figuring out new ways to offset higher costs. “One way of countering the costs is to reduce beer capacity by as much as 100 milliliters for a 660-ml bottle,” said the head of a local beer company." Surely, the dumb local peasantry will never figure this cheap trick out.

More from Business China:

Since January, CR Snow Breweries, China’s largest brewer by volume, has raised prices by more than 10% in Sichuan, Liaoning and Anhui provinces, where it enjoys a dominant position in the market.

Tsingtao Brewery also hiked prices of several products in the following months by an average of 10%, the company announced earlier.

The beer maker is considering another 5% hike for its core products this month, according to several industry analysts and market watchers.

“Costs of raw materials have been rising since the second half of last year, and then the cost of labor also went up by almost 30% since the beginning of this year,” said an industry insider.

The NDRC said it understood the position of beer makers given their rising costs, but said gains in liquor prices were inappropriate as liquor makers’ production costs had not risen by as much as those of brewers. The commission urged both beer and liquor makers to stabilize prices.

Prompted by rising inflation in China - the consumer price index (CPI) might have risen above 5% in March according to some analysts – government bodies are trying to take measures to contain or bring prices down. The central government is targeting a 4% increase in the CPI this year.

Chinese media have been reporting that many manufacturers, P&G and Unilever included, are planning to increase the prices of cleaning and personal care items by 10% on average from April.

Questions have been raised by commentators as to whether some leading industry players are colluding to raise prices.

Consumer goods makers and food and drink enterprises have been invited by the NDRC to discuss putting off their price hikes.

Next up: booze subsidies, import tarriffs and Chuck Shumer going apeshit over Budweiser layoffs. In the meantime, the Jasmine Revolution is drinking its last afforadble shots of rice vodka before it gathers the courage to known on the doors of the politburo.

 

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RobotTrader's picture

Chain-selling in pretty much everything this afternoon.  Industrials, Golds, Oils, everything.

Another follow through day like this, then Lacker will change his mind and demand QE3 instantly.

camaro68ss's picture

Beer prices going up, noooo not the beer, anything but the beer! we are all doomed!

how am i going to get my buzz on to help me forget about this mess

Ruffcut's picture

Beer prices going up.

Them be fightin words, BOY!

spiral_eyes's picture

the solution to rampant chinese inflation (export less) is the spark for western hyperinflation (can't manufacture enough to make up the shortfall)

i-dog's picture

I'm surprised by this item. The Chinese don't drink much beer per capita at all (couldn't even find any stats ... not even in the top 50 per capita consumers on Wiki).

Most of them are almost allergic to alcohol !!

The Limerick King's picture

The Chinese inflation is here

My God man just look at the beer

It now costs a lot

To make fatties look hot

They're better off turning full queer

 

BigJim's picture

Don't worry, the feds will appoint JPM to administer the new Beer Stamps Program.

Long-John-Silver's picture

Boil rotting potatoes and sugar in a copper kettle. Cut the heads and tails so you don't go blind. Near instant gratification.

StychoKiller's picture

Just glad I bought a couple of bottles of Sake last month at World Market™

Ahmeexnal's picture

Rice price going up: replace rice with plastic.

Beer price going up: replace beer with piss.

tmosley's picture

Oh God, they're going to start making them drink NA beer?

The Axe's picture

Beer....Fuck ---this is bad....

SPUTNIK's picture

I'll tell you something. I'm from India, Bangalore. I see that job market is booming here. I work for an International call center here and my company is getting new projects every fortnight. All are USA clients. All the wealth from US is flowing to India. You should look at the face of the clients who visits our facility, they look scared and humbled.

USA rip!!!!

duo's picture

While beer has essentially doubled in price in the last 4 years, wine is up maybe 20%.  Why?

Beer => conglomerates => grains => => commodities markets => hundreds of well-paid executives (InBev, etc).

Wine => small producers => grape co-ops => supply/demand, no futures markets or GS/JPM influence

StychoKiller's picture

Right now, I've got 6Gal of Mead aging in a carboy...

LostWages's picture

No cerveza, no trabajo bitchez!

 

StychoKiller's picture

Um, shouldn't that be:  No trabajo, no cerveza?

John Law Lives's picture

But the Great Chairsatan says Central Planning is not the cause of this surge in food and energy.  It is because of exploding demand.  The Great Chairsatan wouldn't lie to us, would it?

tmosley's picture

Who cares?  You can't eat beer.

Ruffcut's picture

Hey der dude, beer is food.

tmosley's picture

But you can't eat food either!

You can only eat iPads.

SPUTNIK's picture

I'll tell you something. I'm from India, Bangalore. I see that job market is booming here. I work for an International call center here and my company is getting new projects every fortnight. All are USA clients. All the wealth from US is flowing to India. You should look at the face of the clients who visits our facility, they look scared and humbled.

USA rip!!!!

tmosley's picture

Yes, India is truly wealthy.  A half ounce of gold for every citizen will do that.  Her true wealth will become apparent in the coming years.  Your gold alone may be enough to buoy your people to US living standards (though not to 90's US living standards).

You guys need to work on your manufacturing base, though, and secure energy resources, as you burn three times as much as you produce, much like the US.  Sadly, your bureaucracy and regulatory structure are extreme hinderances.  

SPUTNIK's picture

I'll explain that for you. When dollar collapses (dollar index less than 71) india will come down badly. The main thing for India is oil and the main thing need to get that oil is US DOLLAR RESERVES. Now, when dollar collapses, the indian dollar reserve will be useless and we can't buy oil.

fiddler_on_the_roof's picture

True, but I think the true pain will be when DXY is less than say 65. you sound smart to be more than working in a call center.

SPUTNIK's picture

I'm here on zh just watching all the blogs for more than 1 year now. I logon to investmentwatch.com, zh, marketwatch.com blog, businessinsider.com and kitco blogs.

Stuyding macro economics from past 2 years now. The world economic and social situation is really bone chilling. When I try to explain this to my friends and relatives they all ignore it and they think i'm hysterical.

SPUTNIK's picture

Why are americans sending their executives here like crazy, I really don't understand it. Our management is fooling them with all promises and I'm really ashamed.

The biggest culprits being IBM, HP, DELL and ALL OTHER ACCOUNTING AND FINANCIAL COMPANIES.

I bet that there are more IBM employees in India than in USA.

What is the corporate tax collected from these large companies IN USA. For usa they neither create jobs nor tax revenue. They are parasites.

chubbar's picture

There's a sandwich in every pint!

StychoKiller's picture

A sandwich in every glass!

SilverRhino's picture

Obviously you have never tried to drink liquid pumperknickel aka Guiness. ;-)

velobabe's picture

all I eat when in Beijing was beer. I did not like the food. they sold the beer in little street cart vendors, it was fun!

StychoKiller's picture

So, not adventerous enough to try fried crickets on a stick?

Sweet Chicken's picture

Shit just got real!

yabyum's picture

Look for your 40 oz to become a 30 oz. Bastards!

plocequ1's picture

Carlo Rossi Merlot, $15 for a huge jug. 

JohnG's picture

Life is too short to drink bad wine my friend.

Bam_Man's picture

Castello di Bossi Chianti Classico Berardo Riserva 2006, $24.99/bottle.

There is absolutely NO inflation in the price very good Italian wines. If anything, the prices are dropping due to tapped-out consumers trading down to...ahem... Carlo Rossi and "boxed wines". 

velobabe's picture

I have been enjoying buyin Pinot G at my local wine shop. from small little vineyards around all of Italy. he said they aren't going up in price.

Bam_Man's picture

Good for you velobabe!

If you want to give a very nice approachable Italian red a try, I recommend Michele Chiarlo Barbera d'Asti Superiore Le Orme 2008. A beautiful, fruity Piedmont red for about $12!

Lothar the Rottweiler's picture

Go long Boone's Farm!!!

hedgeless_horseman's picture

Captain Broccoli, should I buy the fucking dip in the SPY now?

Global Hunter's picture

...but there's panic on the streets of Carlisle

Dublin, Dundee, Humberside

I wonder to myself...

Burn down the CNBC

Hang the blessed chairsatan

Hang the DJ hang the DJ hang the DJ hang the DJ 

Hang the DJ

Cruel Aid's picture

Packaging costs getting jacked at the expense of product. Just charge more/bottle and stop screwing with my intoxication calculations.

Global Hunter's picture

Had a quick boo on CNBC and they're speculating today's "sell off" is because of a knee jerk panic reaction.  Love it, they're definitely jumpy. 

Dick Darlington's picture

Let them drink iPads...

Misean's picture

Beer and booze creates transients. The inflation is transitory. Simple logic. I'm going to go try and distill a Droid.