Inflation affects the price of all products. Though the slow economy has made most of us tighten our belts, and prices continue to rise. As the summer season approaches, with promises of barbecues and outdoor activities, beer prices are escalating faster than they have in three years.
Prices continue to escalate
The price of beer has steadily increased in 2011, up 2.6 percent in both January and February. And domestic, specialty and non-alcoholic beer prices have gone up 5 percent to 8 percent from a just a year ago. Craft beers have been hit especially hard. Prices are up 42 cents a case since last year, according to Paul Gatza, who is director of the Brewers Association.
Hop crunch is still being felt
The essential ingredient in beer is hops. Germany supplies roughly 35 percent of the world’s supply of the green conical flowers. Three years ago Bavaria, the largest state in Germany, was devastated by a poor hops crop. Brewers worldwide felt the crunch, prices rose and, though the crisis has lessened somewhat since then, they are still scrambling to make up for it.
Grain production is down
The other key ingredient that goes into beer (aside from water) is grains. Malted barley is the one most commonly used. Grain production is down this season because of a drought in China and a devastating heat wave in the Ukraine region of Russia. This choke is also adding to the cost of beer. According to the International Monetary Fund, the price of barley has risen to $196.37 per metric ton from $137.30 last year.
Fuel costs another major factor
Transportation is another factor. Not only does the final product have to be shipped from the manufacturer to the consumer, but all these raw materials have to be delivered to the brewer in the first place. As the cost of bio-fuels rise, so does every can, bottle and keg of beer.
Pub closures in the U.K.
And the pressure is being felt all over the world. England is suffering a small business crisis as pub after pub – a mainstay of their local economy – are closing down. While the smoking ban and recent tax hikes have also been blamed for this trend, the largest reason seems to be the difference in cost of drinking out and drinking at home.
“I would drink in pubs if the prices were not so high,” said Pete Jayes of Corby, England. “You can buy it for half the price in the
supermarket.”
Sources
DailyFinance: http://www.dailyfinance.com/2011/05/19/whys-my-beer-so-expensive-the-forces-behind-a-sudsy-economic-i/
Evening Telegraph: http://www.northantset.co.uk/news/local/corby/jobs_fear_over_the_rising_cost_of_beer_1_2503350
Fox Business: http://www.foxbusiness.com/personal-finance/2011/03/17/raise-glass-higher-beer-prices-st-patricks-day/
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