Beer Lovers Cringe as the Price of Beer Rises

Enjoying a cold one is probably your preferred way to wind down a long day. However, you might be paying more for your beer than you once did. Beer lovers around the nation are experiencing higher prices for their preferred brews. While you might chalk that up to little more than the lingering economic problems, there are quite a few other factors at play here. The cost for beer has risen by about 3%, though some drinkers will pay more than this to enjoy a frothy beverage. What’s behind the price increase?

Trouble for Hops

One of the most important ingredients in any beer is hops. This ingredient adds bitterness and flavor, but also helps to protect the brew from the ravages of aging, extending its life considerably. The problem here is the rising cost for many different types of hops. The supply of hops has dropped a lot recently, particularly due to the poor harvest in Bavaria – where a large percentage of the world’s hop harvest comes from. As the supply for something goes down and demand rises, you can expect prices to go up. It’s simply the law of supply and demand.

Grain Production Slows

Grain is another vital ingredient for beer – perhaps the most important, beyond good water. The problem here is that the world’s grain production has been dropping for some time. Canada suffered a terrible reduction in their grain production and the same is happening in the Ukraine. With less grain available but the demand for beer growing on all fronts, the prices will keep going up until the world once again has a surplus. You also have to divide the supply of grains available between the myriad uses – livestock feed, bread and food production and more. It all adds up to a small supply.

Transportation Costs Increasing

You’ve definitely noticed the higher prices at the fuel pump recently. Breweries are noticing the same thing but they’re hit twice with those high charges. First, they have to pay for supplies to be shipped to them. Second, they have to pay for distribution for their products. That all adds up to a lot of money being paid just to ship beer and ingredients around the world and you can bet that cost is going to be passed on to you.

These are only a few of the reasons behind the higher prices you’re paying for your preferred brew at the checkout counter. 

Posted on June 7, 2011 and filed under The Business of Beer.