Pitcher This: Price of beer becomes more dear
01-09-2008
Gas is nearing $3 per gallon. Milk's past four bucks now. Health insurance and college tuition keep costing more.
And now it's even getting more expensive to drown your sorrows.
Beer lovers should start bracing for a jump in prices, as a squeeze on beer's two main ingredients — hops and malted barley — works its way from farmers to brewers to distributors to your glass.
A complicated mix of factors — from bad weather in Europe, Australia and the American Northwest to the push for biofuels and the basic economics of farming — is making both hops and barley harder to find. That makes them more expensive for brewers to buy, and consequently pricier for the consumer to pour.
Julia Herz, craft beer marketing director for the Brewers Association, says she has seen brewers paying twice as much for malted barley as in previous years. The price for hops has grown 300 to 400 percent, she says.
That's especially difficult for the craft brewers Herz's group represents. For starters, they are far smaller operations than their mega-brewing cousins such as Anheuser-Busch and MillerCoors, and don't have the same leverage with suppliers. And the more flavorful beers they produce rely on exactly the ingredients that are getting more expensive.
"The American craft brewer … is likely the hardest hit," Herz said. "To get more flavor you put in more malt and more hops."
Different brewers are dealing with the shortages and price spikes in different ways.
Atlanta-based microbrewer Sweetwater is paying around $9 per pound for the hops it uses in its line of beer, according to Steve Farace, who carries the unlikely title "minister of propaganda." That's up from $3.75 per pound. That, plus twice as much cost for barley, has meant about $500,000 per year in increased production costs.
Sweetwater has grown large enough to sign a two-year contract with its hops supplier, locking in the current price, though it can save money if supply improves. That means the company hasn't had to fool with its recipes. As for the cost, Farace said Sweetwater "will take some of it on the chin," but that buyers will soon see a price increase of around $1 per six pack. That's on top of the roughly $8 the brewery's fans are already paying.
At Hurricane Brewing Co., Mobile's only brewpub, customers will now pay $4 for a pint, up by 50 cents. It buys malt and hops in batches too small for a long-term supply contract to make sense. Head brewer Todd Hicks says the restaurant and brewery will alter its beer lineup and tinker with the recipes to deal with higher costs. Its super-hoppy India pale ale has been replaced with a standard pale ale to stretch the hops the company can afford to buy.
"That way we can keep the price in check. The beer's a little bit lighter, but still full flavored," Hicks said. "We can't make beer if we use up all our ingredients."
This post is the permanent home of what I'm calling the Pitcher This Price Check. Most know by now that beer prices are on the rise, thanks to shortages and market changes for hops and malted barely, two of beer's essential ingredients. Brewers, of course, will have to pass on their higher cost to distributors and to you, the drinker. But just how much will you wind up paying?
