- Brewers face many challenges as inflation and supply chain issues increase beer production and shipping costs.
- The shortage of aluminum cans and carbon dioxide used to make beer has deterred some brewers.
- For consumers, beer prices have risen 5% so far this year, but not as fast as for other products, including food, which has risen about 11%.
The potential arises as it is under pressure from the coming together of large and small breweries. inflation and a few supply chain issues. Some breweries have trouble getting the carbon dioxide (CO2) used to clean tanks and carbonated beer. When they get it, the price is usually higher, sometimes twice what they used to pay.
Also rising: the price of other ingredients, such as malted barley, and the cost of shipping this and other products.
All this can lead to higher beer prices. And it can cause some of your favorite beers to be out of stock or out of tap.
“I don’t know if I can imagine a scenario where no beer will ever come out of the brewery, but I can understand a scenario where there will be a limited or smaller offer because the beer has a short shelf life.” said Chuck Aaron, owner and founder Jersey Girl Beer in Hackettstown, NJ
The environment is harsh enough to force some breweries to close. “This could definitely be a factor in the closures,” Bart Watson, chief economist of the Brewers Association, told USA TODAY.
In a mid-year survey of the association’s membership – some 5,600 small and independent breweries in the US – some brewers had this to say: “We sell as much beer as before the pandemic, but we make much less from this beer, and we’re not sure how sustainable that is, ‘ said Watson.
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Why might there be a shortage of beer?
Because breweries accustomed to some supply chain struggles are facing a growing list of headaches. The price and availability of aluminum cans has become increasingly volatile as cans become critical to the survival of breweries. Many turned to avoid pickup and offsite distribution During the national shutdown caused by COVID-19.
Similarly, in a recent report, the supply of CO2 “has remained tight since the famine in Spring 2020”, Watson said. Breweries often received less than they ordered – or worse, never delivered the promised quantities.
Now, inflation has increased the entire cost of breweries’ shopping list. as for all americans. This means breweries will likely pay more for CO2, cans, paper products, malt (grains needed to make beer), and hops.
“What’s unprecedented is the number of areas where we see challenges,” Watson told USA TODAY.
Easy Brewing Co. Falls Church, Virginia isn’t too affected by the CO2 price hikes, but pays an additional two cents per can for the can line purchased during the pandemic, co-owner Frank Kuhns said.
But other price increases hit harder, including $150-300 “gas travel” fees for each delivery from suppliers, and labor and equipment costs that are 30-40% more than originally budgeted for the construction of a second Northern Virginia location a few miles away. in Oakton, Virginia.
“Until now, we have decided not to pass these increases on to the customer and instead seek out new suppliers or cut costs without sacrificing quality,” Kuhns said.
Despite the dilemma, the country’s beer taps likely won’t run dry. But they can be tempered, he said.
“I’m not sure I’d go so far as to say there will be shortages. Individual producers may have issues, but it’s not so common that you’ll see empty beer racks,” Watson said. “I think the brand of beer that consumers occasionally want out of stock is closer to the truth. And brewers can produce different or less of a 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 clean fermentation tanks and keep oxygen out before they are refilled. “Oxygen is the devil of beer, and it kills beer if it has oxygen in it,” Aaron said.
But many breweries have had a very bad time getting the CO2 they need. One of the main contributors is a natural source of CO2, Jackson DomeAn extinct volcano in Mississippi “is facing a problem of contamination with raw gas from the mine, which is causing a significant reduction in available food-grade CO2,” Watson told brewers in a July report.
High demand and some shutdowns of ammonia plants that create and capture CO2 for sale to other industries have further increased the deficit. There are also rail disputes that disrupt deliveries, Wrote Forbes columnist Richard Howellsand supply chain manager.
“Yes, you heard it right,” Howells wrote. “In this age of trying to reduce CO2 emissions into the atmosphere, we will experience CO2 shortages, the carbonation that is so beloved by millions of concerned beer drinkers.”
How are breweries coping with CO2 shortages?
Many had to pay more for CO2, while many had to find alternative suppliers. If a brewer can’t get enough, it could result in some beers not being made, said Tomme Arthur, co-founder and chief operating officer of his company. Port Beer and Lost Monastery in San Diego County, California.
“I don’t expect 18 packs of beer to be missing in the grocery aisles,” he said. “But your local craft brewer risks having to adjust brew schedules and outputs based on this CO2 deficiency and the need for it in most brewing applications.”
At Jersey Girl Brewing, the cost has doubled last year, from about 20 cents to 44 cents per pound.
Aaron said the brewery “watched the bill price move up and down” as it filled its bulk tanks, which could hold 1,500 pounds of gas.
Aaron also had to decide not to make some beers, such as Helles beer, because the German grains needed were too expensive with increased shipping prices. And some beers that needed New Zealand International hops weren’t produced.
I hope we will be able to reintroduce them to the market when prices are back to the same level.”
Earlier this week, Axios reported “U.S. beer shortages come with the gap in carbon dioxide supply.” He also noted that some breweries are equipped to capture the CO2 emitted during the brewing process, but this is too expensive.
Also competition 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. Said.
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Could beer be more expensive?
According to the Consumer Price Index, the price of beer purchased for home drinking increased by approximately 5% as of August 2022 compared to August 2021. This is higher than whiskey (3%), wine (2.5%) and other spirits (1.2%).
Another barometer of pricing: Consumers’ average cost for beer rose 3.4% last year for the equivalent of 24 packs of 12 oz. cans are based on prices for the week ending September. According to Nielsen IQ, 10, 2022.
Beer price increases were also below last year’s. other consumer goods – overall, prices increased 8.3% compared to a year ago and food increased 11.4%. Beverage industry consultant Bump Williams said the price hikes “didn’t deter consumers from trading”, whether it was craft beers, imported beers or canned cocktails and mineral water.
Consumers are also buying more 12-packs and disposable cans as they “change their buying behavior as inflation rises, interest rates rise, gas prices rise, and the falling stock market turns 401,000 to 201k.” aforementioned. “So people today manage their spending on affordable luxury a little differently.”
Can can prices also affect beer supply?
Probably indirectly, because aluminum prices are just one of several costs brewers have seen rising. “The costs of cans are still much higher than they used to be, and when prices rise in the way we experience them, you tend not to see them fall back,” Aaron said.
While there has been less volatility lately, Ball Corp., one of the nation’s largest can makers, has had some breweries find a new supplier. increased minimum requirements for customers earlier this yearreferring to an unprecedented demand.
“We were sent out in an effort to find an alternative supplier,” said Arthur, who charges 1.5 cents more per unit. “A truckload of boxes is about 156,000 units, so that’s the sum of pennies,” he said.
“I’ve never seen this level of inflationary pressures directly coupled with famines. It’s nonsense to put it mildly,” said Arthur. “I suspect nearly every brewery in the city is stuck on the same fronts.”
Follow Mike Snider on Twitter: @mikesnider.