- Brewers face many challenges as inflation and supply chain issues increase the cost of brewing and shipping.
- Aluminum cans used in beer production and the lack of carbon dioxide have hindered some brewers.
- Beer prices are rising for consumers – up 5% so far this year – but not as fast as other goods, including food, which are up about 11%.
We haven’t had a shortage lately. There was a toilet paper and computer chips, followed tampons and baby formula. Could the next drawback be beer-related?
The potential comes as they are under pressure from a merger of large and small brewers inflation and several supply chain issues. Some breweries have had trouble getting the carbon dioxide (CO2) used to clean tanks and carbonate beer. When they do get it, the price is often higher, sometimes double what they paid.
Also rising: the price of other ingredients, such as malted barley, and the cost of transporting these and other products.
All this can lead to an increase in beer prices. And this may result in some of your favorite beers being out of stock or unavailable.
“I don’t know if I can think of a scenario where there will be no beer from the brewery, but I can imagine a scenario where there will be a limited or smaller supply because the beer has a short shelf life,” he said. Chuck Aaron, Owner and Founder Jersey Girl Beer Hackettstown, NJ
The environment is so challenging that it can force some breweries to close. “It certainly could be a factor in the shutdown,” Bart Watson, chief economist for the Brewers Association, told USA TODAY.
In a mid-year survey of the association’s members — about 5,600 U.S. small and independent breweries — some brewers felt: “We’re selling as much beer as we did before the pandemic, but we’re making less from that beer, and we’re not sure how long that will last,” Watson said.
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Why might there be a shortage of beer?
Because breweries, accustomed to some supply chain struggles, are facing an ever-growing list of headaches. The cost and availability of aluminum cans became increasingly volatile as cans became critical to the survival of breweries. Many focused on curbside pickup and off-site distribution During the national shutdown brought on by COVID-19.
Similarly, Watson said in a recent report that CO2 supply “has remained tight since the shortage in spring 2020.” Breweries often received less than what they ordered – or worse, didn’t deliver the promised amounts at all.
Now inflation has driven up all the costs on the breweries shopping list. as it is for all Americans. This means breweries pay more for CO2, cans, paper products, malt (the grains needed to make beer) and hops.
“What’s not seen is the number of areas where we’re seeing problems,” Watson told USA TODAY.
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Settle Down Easy Brewing Co. Falls Church, Virginia, hasn’t been hit hard by the CO2 price hike, but it’s paying an extra two cents per can for a canned line bought during the pandemic, said co-owner Frank Kuhns.
But other price increases had a greater impact, including $150 to $300 per delivery “gas trip” fees from suppliers and labor and equipment costs that were 30% to 40% over the original budget to build a second Northern Virginia location a few miles away. . in Oakton, Virginia.
“So far we have decided to keep these increases and not pass them on to the customer and instead look for new suppliers or cut costs without sacrificing quality,” Kuhns said.
Despite the dilemma, the nation’s beer taps likely won’t run dry. But they could get angry, he said.
“I’m not sure I’d go so far as to say there will be crashes. Individual producers may have issues, but it’s not that widespread that you’ll see empty beer shelves,” Watson said. “I think the brand of beer that consumers want to be consumed from time to time is closer to being accurate. Brewers can make different or less beer.”
Why is carbon dioxide needed to make beer?
Most beer lovers know that brewers use CO2 to carbonate beer. But CO2 is also used to purge fermentation tanks and release oxygen before filling. “Oxygen is the devil in beer, and if it has oxygen in it, it will kill the beer,” Aaron said.
But many breweries have had a devil of a time getting the CO2 they need. The main contribution is that the natural source of CO2, Jackson DomeWatson, an extinct volcano in Mississippi, “faces a pollution problem with raw gas from the mine, and available food grade CO is significantly reduced,” he told brewers in a July report.
High demand and some shutdowns at ammonia plants, which generate and capture CO2 to sell to other industries, have exacerbated the shortage. There are rail disputes that stop supplies, Forbes columnist Richard Howells wrotesupply chain executive.
“Yes, you heard that right,” Howells wrote. “As we try to reduce CO2 emissions into the atmosphere, we will face a shortage of CO2, which provides the carbonation that millions of beer drinkers love.”
How are breweries coping with the lack of CO2?
Many had to pay more for CO2, and many had to find alternative suppliers. If a brewer can’t buy enough, it could lead to some beers not being made, said Tomme Arthur, the company’s co-founder and chief operating officer. Port Brewing and The Lost Abbey in San Diego County, California.
“I don’t expect 18-packs of lager to be missing from the grocery aisles,” he said. “But your local craft brewer is certainly at risk of adjusting their brewing schedules and products based on the lack of CO2 and the need for it in many brewing practices.”
At Jersey Girl Brewing, the price has doubled over the past year, from about 20 cents to 44 cents a pound.
Aaron said he’s “watched the bill prices go up and down as he fills up” the brewery’s bulk tanks, which can hold 1,500 pounds of gas.
Aaron also decided not to make some beers, such as Helles lager, because the required German grains were too expensive with increased shipping costs. Some beers that require New Zealand International hops are not produced.
“Hopefully, once the prices adjust, we will be able to re-introduce them to the market,” he said.
Earlier this week This was reported by Axios that “the beer shortage in the US creates a gap in the supply of carbon dioxide”. He also noted that some breweries have equipment to capture the CO2 released during brewing, but it is very expensive.
Also competing for CO2: Other industries, including carbonated beverage manufacturers and food manufacturers. “As we’ve learned, brewers are a relatively small user of CO2 in the grand scheme of things,” Watson said.
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Can beer become more expensive?
There already is. Creators Miller Lite and Coors Lightand Bud Light – as well as Stella Artois – recently raised prices. But beer prices are much lower than the cost of production.
According to the Consumer Price Index, the price of beer purchased for consumption at home increased by about 5% in August 2022 compared to August 2021. This is higher than whiskey (3%), wine (2.5%) and other spirits (1.2%).
Another barometer of pricing: The average price to consumers for beer has increased 3.4% over the past year for a 24-pack of 12-ounce equivalents. dogs are based on prices for the week ending in September. 10, 2022 according to Nielsen IQ.
The price increase of beer is also lower than that other consumer goods – in general, compared to a year ago, prices increased by 8.3%, and food products by 11.4%. Bump Williams, a beverage industry consultant, said the price hikes haven’t stopped consumers from trading up to craft beers, imported beers or canned cocktails and seltzers.
Consumers are also buying more 12-packs and single-serve boxes as they “change their buying behavior with rising inflation, rising interest rates, rising gas prices and a declining stock market turning 401k into 201k,” Williams said. “So people manage their affordable luxury spending a little differently today.”
Can the price of cans also affect the supply of beer?
Perhaps indirectly, aluminum prices are just one of several costs that brewers have seen rise. Aaron said that the price of the cans is “still a lot higher than before, and I believe that once the prices go up the way we have, you’re not going to see them come back.”
Although less volatile recently, Ball Corp., one of the nation’s largest can makers. earlier this year it increased its minimum requirements for customersciting unprecedented demand.
“They sent us scrambling to find an alternative supplier,” Arthur said, which costs 1.5 cents more per unit. “A truckload of boxes is about 156,000 units, so it adds up to pennies,” he said.
“I’ve never seen this level of inflationary pressures coupled with open deficits. It’s disgusting, to say the least,” Arthur said. “I suspect almost every brewery in town is stuck on the same fronts.”
Follow Mike Snyder on Twitter: @mikesnider.
