If you thought skyrocketing gas prices signaled bad news, wait until you hear beer prices are on the rise too. Yep, that’s right Outsiders, it seems fuel isn’t the only American staple facing worsening inflation. Apparently, when it comes to economic crises, nothing gets left unscathed.
At a Glance:
- Beer prices are on the rise, however, it’s not breweries and bars instigating the hike.
- Beer costs rose 2% between January and February.
- Production has turned less profitable for brewery owners as prices for necessary components skyrocket.
Inflation Driving Up Cost for All Beer Components
As an avid beer enthusiast, price hikes for a brew signal bad news for a mom of two under two. And surely many Outsiders are beginning to feel the same way. Considering the rate at which inflation has surged within the last year, it was only a matter of time before even the most affordable of alcoholic beverages began to show effects.
However, Fox Business notes that beer prices have been slower to rise in comparison to other consumer goods. Several examples include groceries, clothing, and, most significantly, energy. We’re here to determine why.
Simply put, the cost for everything it takes to pour out a glass of your favorite draft, from grain to glass, has gone up. Until now, though, much of that cost has not translated on to the consumer. That said, the effects of inflation on craft brewers and bar owners have become more significant.
Bart Watson, Chief Economist for the Brewers Association, confirmed that costs for production have begun to take their toll on consumers.
“Packaging increases, labor cost increases, supply chain cost and shipping increases, barley and malt increases, and we’re starting to see that translate into consumer prices,” Watson stated. He added, “What we saw in the February (consumer price index) numbers is that inflation is starting to pick up in beer, though maybe still lagging in the overall consumer price index.”
Beer Rise 2% in 2 Months
As a result of increased production costs, beer prices across the U.S. have risen 2% in just two months. In order to provide perspective, that’s the typical increase expected in the industry for an entire calendar year.
Sean Derfield is the owner of Sean Finnegan’s Pub in Sacramento, California. As an experienced businessman, he stated, “It’s going to be no time before it’s $8 for a draft beer.”
In speaking with the news outlet, Derfield shared, “When I started, there was a lot of profit in the bar business.”
Now though, things have become less profitable.
For the price of barley alone, one of the most important components necessary for a brew, prices rose nearly 200% within the last two years.
“This is a challenge for breweries,” Derfield said, “since malt and barely are a primary ingredient, particularly for small brewers,” Watson said.
Combined with ongoing supply chain issues and shipping delays, beer prices are likely to rise even more.