District St. Paul - Minneapolis
May 2008 News

Rising Prices

Montreal Gazette – Microbrewers every where are feeling the impact of the huge increases in oil prices. It seems that microbrewers are going to feel the hardest impact on their profit margins. Small breweries are not going to be making as much on their product due to the ever increasing cost of commodities and energy. It seems that not only are hops, barley, and wheat in short supply, but they are becoming financially unreachable for some artisanal and other smaller microbreweries. They are also facing higher prices on fuel for deliveries and other raw materials such as glass and cardboard for packaging.

The Daily Journal- All Raw materials for beer are on the upward swing. This is in part due to the increase in cost of commodities and fuel. Beer now costs more to make. There are several contributing factors to the increased price of hops such as a fire in Yakima, WA, a failed crop in Europe (roughly 75% lost) and droughts in Australia. The increase in barley costs is nothing to sneeze at either. There has been an 80% leap in the price of malt . This is due to the supply of barley slowly being displaced by corn and soybeans . Corn and soybeans are becoming more and more lucrative to the farmer for biodiesel feed stock. As more farmers switch to other crops, barley prices increase to keep what few farmers there are. All of this said consumers can expect to pay more for their beer this year. Brewers are not in the business to lose money and have to pass on the increases to everyone else. But we must keep in mind that even though consumers are seeing higher prices it is still pretty reasonable when one compares beer to specialty coffee (up to $4 a cup) or bottled water ($2 a bottle). Tom Peters of Fort Collins Brewery puts it into perspective with his statement, “a lot of people are making a lot of waves on the price of beer. It’s less than $1.50 a bottle for 12-ounces, and it’s still a good value” (Coloradoan.com)

Rebecca Jennings
District St. Paul-Minneapolis
rjennings@rahr.com