New Zealand's bars and restaurants have had a ''guts full'' of being caught between penny-pinching consumers and price hikes from major breweries, saying they'll have no choice but to pass the costs to drinkers.

That's according to Hospitality New Zealand, which says many of these small businesses no longer have the capacity to absorb the latest price hikes from the country's two major liquor producers.

DB is hiking the price of ready-to-drinks by 4 per cent, beer and cider by 3 per cent, and tap products by 1 per cent, effective as of March.

Similarly, Lion Breweries alerted customers last week that it would be raising the price of tap beers by 1.5 per cent although costs of wine, spirits and RTDs would remain unchanged.

''Many operators believe they have no option but to try and absorb these cost increases to ensure their customers remain loyal and this approach is causing them to suffer,'' said association president Adam Cunningham.

''The public just needs to be aware that the cost increase on any product to an operator must be passed on and the industry has certainly had a guts full of taking the flak for price increases that we don't initiate, don't like and are unable to control.''

Failing to pass on these costs would result in many businesses going under, Cunningham said, which would hit the local hospitality economy but have little impact on the large players, as consumers would likely buy direct from supermarkets.

DB has justified these costs, saying it's facing margin pressures itself, with increased raw material, production, packaging and distribution prices.

The company  ''is experiencing increasing material costs as well as significant pressure on fuel, energy and utility costs,'' said chief executive Brian Blake when the price hikes were announced in January.

''It's certainly regrettable that these rising costs have to be passed on to customers but unfortunately it's unavoidable.''

Lion Nathan has also came under fire recently after press reports claimed a six-pack of its flagship beverage, Steinlager, cost a lot more in New Zealand than it does in the UK or the US.

Lion has hit back at the criticism saying ''on any given day in any international market, consumers will be able to find NZ products selling for less than they pay here, and down the road at another retailer for more.''

PR woman Liz Read said while about 60 per cent of beer in New Zealand is sold on promotion, in the case of the Steinlager six-pack beer identified in the press reports, it was a convenience format pack hardly ever sold on promotion in this market.  

According to the latest figures from Statistics New Zealand, food and drink costs at restaurants and ready-to-eat establishments are already on the rise, with prices up 0.2 per cent in January compared to the previous month.

By comparison, the headline food price index was unchanged in January versus that of December.

In December, new entrant into the tap beer segment, Independent Liquor, accused DB of discounting keg prices in order block its licensed Carlsberg and Kingfisher brands from entering the market.

DB is wholly owned by Singapore-based Asia Pacific Breweries - the maker of Tiger beer. Lion Breweries is a subsidiary of Japanese-based Kirin Holdings.

- © Fairfax NZ News