Higher Beer Prices on the Way as Barley Costs Increase

There are three main costs to brewing beer, whether that's beer at a major international brewery or with a microbrewery – labor, bottles or cans and barley. The cost of brewing your favorite beverage is set to increase in the not too distant future thanks to a massive shortfall in one of those three categories. Barely is increasing in price around the world, and that cost will be passed on to breweries. Canada is one of the two largest exporters of malting barley in the world, and 2010 marked the worst harvest for our northern neighbor in a very long time.

In fact, during 2010, Canada did not export any malting barley at all. That means the global supply of this vital component of many beer recipes will be less available than previously. According to the Canadian government, the cost of barley is set to jump by about one-third. Previously, a metric tonne of malting barley cost about $253. The 2011 crop will cost $337 per metric tonne. What does this mean for breweries and beer lovers around the world? It means that you'll need to dig a bit deeper in your pocket for that next purchase.

Of course, everything has increased in price, from basic groceries like meat, vegetables and cheese to processed foods, so the increase in the price for malting barley is just another "sign of the times." However, the cost could be so high that some very small breweries cannot afford to remain in business. Those hardest hit will be home brewers and nano breweries, followed by microbreweries and then the major players. Everyone will have higher costs, though, and those costs will certainly be passed along to the beer drinkers out there.

Canadian authorities don't expect to see a massive decline in beer consumption and the same is likely to be true here in the States as well. People love their beer and those who set it as a necessity will still continue to buy it. It will still be poured in bars and taverns throughout the world. People will likely be purchasing less of it at a time, though. Most experts predict that drinkers will be purchasing 12-packs or 6-packs rather than full cases because of the cost increases coming down the line. Still, so long as brewers are able to keep doing what they do best, brew aficionados will help them stay in business and things will improve, eventually.

 

Posted on March 28, 2011 and filed under The Business of Beer.