- Jon Kelley
- A local beer-buyer reacts (OK, upon request) to steeper craft-beer prices.
Crikey! You were just about to pick up a six-pack of your favorite stout when your relaxation was broken by a surprise attack of sticker-shock.
That's right, a six-pack of your favorite craft brew's likely gotten $1 to $2.50 more expensive. At some package stores, cases of the good stuff have gone up as much as $8.
"It's still a heck of a lot cheaper to buy it here than it is in a bar," points out Jack Backman, owner of Colorado Springs' Cheers Liquor Mart.
If you've kept up on the news, you've known this was coming. Hops shortage ... blah, blah, blah ... barley price hike ... blah, blah. And something else you probably heard: This is all ethanol's fault. Instead of growing barley and hops crops, farmers are growing corn to cash in on the growing biofuel market.
Well, that isn't exactly true. Experts like Julia Herz, of the national nonprofit Brewers Association, say that what's happening more often is that with corn being sold for biofuel, farmers are using barley for animal feed.
And there's a lot more than just that behind your suddenly high-brow Hefeweizen. Try market forces gone awry and bad weather. (Zeus strikes again!)
Mike Bristol, owner of the Springs' Bristol Brewing Co., uses about 10,000 pounds of hops a year. Recently, prices for the breeds of hops he uses most went up 200 to 300 percent. One breed went from $3.35 a pound to $10 a pound.
"We're happy to get them at $10 a pound, because there's a lot of breweries that can't even get 'em," he says.
Bristol is also paying over 70 percent more for barley malt and he uses 50,000 pounds of the stuff a month.
Recently, retail prices for Bristol six-packs went up about $1.
"It's a challenge to try to maintain profitability," Bristol says.
Tripped up on hops
Not long ago, we were rolling in the stuff. We had such huge hops crops, most brewers had stores of it and weren't buying much from farmers.
With a surplus, Economics 101 teaches us, you get lower prices, and less production. The market adjusts! And that's exactly what it did. Over time, the world's farmers gave hops the boot.
Problem was, between 2002 and 2006, beer production globally rose about 17 percent, according to the Beer Institute's 2007 Brewers Almanac. Craft brews, which use more hops than the canned stuff, have been especially popular. In 2007, the Brewers Association reported craft-beer sales had grown 31.5 percent in three years.
So brewers began using up storage just as many farmers were leaving. According to The New Brewer, a Brewers Association trade magazine, there were 515 American hops growers in 1950. By 2007, there were 45.
Some of them, and their European contemporaries, also have suffered bad weather. Plus, in 2006 a Pacific Northwest warehouse fire destroyed 2 million pounds of hops, or about 4 percent of the U.S. crop.
Herz says demand for hops is 10 to 15 percent higher than the current supply. Brewers must buy their share in advance if possible, for much steeper prices than previously required.
Meanwhile, barley malt has turned into a wallet-eater, after two years of drought in Australia and erratic weather in Europe.
Canada still has barley malt for sale. But the Canadian Wheat Board has set a high price for Canadian barley.
As if all this weren't bad enough, the prices of glass, kegs and gas are up, Herz says.
No turning back?
What all this means is that the liquor-store owner isn't trying to rip you off. And that you shouldn't "get even" with your environmentalist neighbor by throwing a rock through the windshield of his Prius.
What everyone wants to know is how much you, the consumer, are willing to pay.
"I don't anticipate the prices will go down even in three years," says Austin Sherwood, beer manager for the Springs' Coaltrain Wine & Spirits. "At that point, inflation will have caught up."
Small brewers, meanwhile, are betting you're too hooked on microbrews to suddenly become a Miller High Life man. Especially in Colorado, where we love our beer. In 2007, Men's Health magazine named Denver the drunkest city in America. Colorado Springs was right behind at No. 3. And in 2006, Colorado became the nation's top beer-producing state, according to the Beer Institute.
What will we do if can't afford our brew? Not all beer is skyrocketing in price; major breweries have more bargaining power. Coors spokeswoman Kim DeVigil says no price increases are expected, despite the higher cost of hops. And, by the way, Coors has had its own barley breeding program since the 1930s.
At Phantom Canyon Brewing Co., the mood is more realistic. Head brewer Andrew Bradley says prices there have gone up 25 cents a pint and $1.50 a pitcher. He says he'll do whatever he can to prevent further increases; he's especially worried that regular customers will be put off by the hikes. But he can only do so much to control the market.
"There hasn't been a night that's gone by," Bradley says, "where I haven't thought about it at least once before I go to bed."