Nothing seems to be safe from inflation right now, and beer is no exception. The cost of raw materials, shipping and manufacturing have all risen in the beer industry, making it more expensive to pour you a pint.
“Our cost as an industry, when we look at the beer producer’s index, which measures all the inputs that go into our beer, be they malt, hops, packaging materials. All these things is at one of the highest levels it’s been at in more than 30 years,” Deschutes Brewery President and CEO Peter Strbek said.
Strbek says that while beer brewers are battling the bill, beer buyers are actually getting a decent deal at the grocery stores.
“Beer represents one of the best values that a consumer can find right now,” Strbek said. “Yes the price has gone up, but relative to everything else in the grocery store, it’s gone up at a lot slower pace. When you think about costs being up north of 30% for brewers, prices have only gone up about 8%.”
There are multiple reasons behind the increased costs.
“The biggest drivers have been malt,” Strbek said. Malt had its worst crop in 2021 in the U.S. since 1934. Really drove the price of malt up This year so far, it’s up 30-plus percent. Aluminum and the price of aluminum cans throughout 2022 was elevated in the double digits of percentage.”
Malt is the ingredient that adds carbohydrates to make beer. Strbek sees a multi-year recovery after a poor 2021 malt harvest and doesn’t expect relief on the malt market until 2024.
Another major factor is the war in Ukraine. Ukraine is the 7th-largest producer of wheat in the world and is forecasted to be the 5th-largest wheat exporter in the 2021-2022 market year according the U.S. Department of Agriculture.
Strbek says that strain on the wheat market will persist until the conflict is resolved.