Barley, the fourth largest grain crop globally, is along with hops, yeast and water, one of beer’s most important components. And although it is primarily grown to feed livestock, beer accounts for about 17% of worldwide barley production.

And now analysts are warning that since Ukraine, which is among the top five global producers of barley, is in the middle of a major geopolitical crisis, international supplies of raw materials would inevitably be affected.

Ankur Jain, chief executive of India-based Bira 91, one of the country’s original craft brewers, told the Economic Times, that the escalating crisis would put further pressure on an industry already reeling from worldwide inflation and supply chain issues…

 “Barley prices have escalated quite significantly and Ukraine will definitely impact global barley pricing in the short to medium term. Whether beer companies will be able to react quickly and increase prices quickly is yet to be seen, and in some cases, is determined by the government.”

Financial services firm Motilal Oswal released a report on February 22 that wasn’t encouraging…

“Escalation in the Ukraine crisis could add to commodity cost risks, particularly barley. Even if beer companies have a blockbuster June quarter, something that they missed out in the past two consecutive summers due to disruptions to mobility from the first and second Covid waves, they could lose their sheen, if margins get significantly affected due to substantial raw material cost inflation.”

A spokesperson for United Breweries, which is majority owned by Dutch multinational Heineken, told the Drinks Business that it had been working on maximizing supplies after two bleak summers brought on by COVID-19…

“With the current crisis, we foresee the pressures of inflation and supply chain disruptions accelerating.”

The beer industry witnessed a steep decline of 39% in 2021 according to data compiled by drinks market analysis firm IWSR and the Russia-Ukraine conflict is yet another worry.

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