Small, local breweries taking hits
The price of suds may get Rocky Mountain-high in the near future.
Thanks to global shortages of hops, the ingredient that gives beer a strong, bitter flavor, and barley, which gives beer a malt flavor, some microbrewers and craft brewers may be forced to raise prices in the coming year.
Depending on the brewery’s supplier, the price of barley has jumped 75 to 80 percent since last year, while the price of hops has risen as high as 400 percent. It has caused some microbrewers around the country to raise prices up to $1 per 12-pack starting Jan. 1.
A slew of factors came together to bring on the shortages. As a whole, farming of the hops and barley has plummeted since the last decade.
Soundbytes
“It’s a hops cesspool. You have everyone from Anheuser-Busch to Mountain Sun using hops.”
-Left Hand Brewing V.P. of Brewing Operations Joe Shiraldi on the demand for hops
“There was a lot of overproduction in the mid-90s,” said Joe Shiraldi, vice president of brewing operations at Left Hand Brewing in Longmont. “So the price went down.”
Not seeing as much of a profit for their crop, many farmers instead opted for higher-earning crops such as wheat or corn. The total acreage used for farming hops in the United States dropped 30 percent between 1995 and 2006, according to CNN.
Already low, production was dealt heavy blows over the past year. Europe has seen a rash of harsh weather as flooding and hailstorms have ruined much of the continent’s crop. Australia has been enduring a nationwide drought as well.
“And now what you wind up with is a shortage,” Shiraldi said. “Now the prices are sky-high.”
Left Hand should have no problem continuing to produce the same styles of beer at the same amount, Shiraldi said, thanks to a contract agreement it holds with its supplier.
“We’re fairly well-protected,” he said. “We’ll be paying more money for that same crop, but there are some places out there that won’t be able to get a crop at all.”
Like many microbreweries around the country, the brands produced under the Left Hand brand may see an increase in price into the next year, Shiraldi said.
Macro-breweries, such as Golden-based Molson Coors, will also take a hit from the shortages but look to have an easier time dealing with it.
“We are also seeing increases in some of our other agricultural commodities, including corn, rice and barley,” Molson Coors spokeswoman Kabira Hatland said. “Hops are important for flavor but insignificant to our cost structure.
“Our wheat costs for Blue Moon are rising, but that is driven primarily by the growth of the brand rather than a change in commodity rates and it’s not a significant percentage of our overall costs.”
To make matters even worse, prices of production materials have risen.
The prices of glass, cardboard and aluminum are rising and the price of kegs has jumped significantly thanks to the value of the steel used to produce them.
The potential increase in prices doesn’t have Lawrence Rangel worried. The senior political science major said that the increase is expected almost entirely from the national economic trends.
“It really isn’t bad considering that salaries are increasing anyway,” Rangel, 22, said. “It’s kind of upsetting at first because all of a sudden I have to pay more for it, but in the long run it’s really not going to hurt my lifestyle simply because I have to pay an extra dollar or so every couple of weeks. It is a drop in the bucket compared to the expendable income I have.”
The nexus of all of the production challenges — coming together like a perfect storm — looks to cause a trying time for the brewing industry in the coming year. But Shiraldi remained optimistic and said the industry will adapt to meet the challenges.
“It’s like a leap year for us,” he said. “Everything is coming together to show us what things need to be different.”
Contact Campus Press Staff Writer Justin Coons at justin.coons@thecampuspress.com.
