Why Your Craft Beer Is Getting More Expensive

As if the highest inflation rate in 40 years and aluminum can shortages weren’t bad enough, craft breweries are bracing for soaring barley prices, as the Russia-Ukraine war continues,

Here’s the deal…

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.

Russia and Ukraine produce 13% and 5% of the world’s barley, respectively, according to a report from Dutch financial services company, Rabobank. Together, the two countries account for 30% of global exports.

And now with Ukraine in the middle of a major geopolitical crisis, international supplies of raw materials will inevitably be affected.

The disruption to barley exports from these warring nations could hit small breweries particularly hard, Bart Watson, the chief economist at Brewers Association told Quartz . “They use three to four times as much malt, often made from barley, per barrel as large brewers,’ he said. In addition, small brewers often don’t have long-term contracts for grains.

On a recent conference call with investors, Brooklyn Brewery CEO Eric Ottaway stated that the price of a six-pack increased by 50 cents to a dollar in 2021, and prices could go up by a “similar amount again before the end of the year.” Brooklyn Brewery, which sells its full spectrum of beers in more than 30 countries, raised prices by 5% to 6% in February.

Even before the war, barley prices were rising due to a drought that impacted production in the US forcing American craft brewers to turn to European growers for the essential grain which is malted then dried as part of the brewing process.

With maltsters scrambling to find a supply, malt prices rose more than 30% between 2020 and 2021 and now in the midst of Russia Ukraine conflict, barley prices are expected to necessarily soar.

It’s a perfect storm of concerning factors, the highest inflation rate in almost four decades, pandemic shortages and bottlenecks, and now the Russia Ukrainian war which will lead to rising barley costs for brewers around the world.

Thanks to the pandemic 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.

So fasten your seat belts and pray for peace people, because craft beer prices are going to get much higher in 2022.

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