- Brewers face many challenges as inflation and supply chain issues drive up the cost of brewing and shipping.
- Shortages of aluminum cans and carbon dioxide, which is used in brewing, have affected some brewers.
- For consumers, beer prices are rising (up 5% year-to-date), but not as fast as other products, including food, which is up around 11%.
We have not endured shortage of shortage recently. There was toilet paper Y computer chip, followed by tampons Y baby formula. Could the next shortage involve beer?
The potential arises when brewers, large and small, are under pressure from a confluence of inflation and several supply chain issues. Some breweries have found it difficult to obtain carbon dioxide (CO2), which is used to clean tanks and carbonate beer. When they do get it, the price is usually higher, sometimes double what they used to pay.
Also on the rise: the price of other ingredients like malted barley, and the cost of shipping that and other products.
All of this could lead to higher beer prices. And, it could result in some of your favorite beers going out of stock or unavailable.
“I don’t know if I can think of a scenario where there would be no beer from a brewery, but I can understand a scenario where there would be limited or smaller supply, since beer has a short shelf life,” he said. Chuck Aaron, owner and founder of Jersey Girl Brewing in Hackettstown, NJ
The environment is challenging enough to force some breweries to close. “This could certainly be a factor in the closures,” Bart Watson, chief economist for the Brewers Association, told USA TODAY.
In a mid-year survey of association members (about 5,600 small, independent breweries in the US), some brewers’ sentiments amounted to: “we’re selling as much beer as before the pandemic, but making a lot more money.” least with that beer, and we’re not sure how long it’s sustainable,” Watson said.
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Why might there be a shortage of beer?
Because breweries, accustomed to some supply chain issues, face a growing list of headaches. The price and availability of aluminum cans became increasingly volatile as cans became critical to the survival of breweries. Many had switched to curbside pickup and off-site distribution during the nationwide lockdown caused by COVID-19.
Similarly, CO2 supply “has remained tight since the shortage in the spring of 2020,” Watson said in a recent report. Breweries often receive less than what they ordered or, worse, have not delivered the amounts promised.
Now, inflation has raised the total cost of the brewery’s shopping list, just as it has done to all Americans. That means breweries are likely to pay more for CO2, cans, paper goods, malt (the grains needed to make beer), and hops.
“What is unprecedented is the number of areas where we are seeing challenges,” Watson told USA TODAY.
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Establish Easy Brewing Co. in Falls Church, Virginia, hasn’t been much affected by CO2 price increases but is paying an extra two cents a can for its canning line, acquired during the pandemic, said co-owner Frank Kuhns.
But other price increases have been harsher, including “gas trip” fees of $150-$300 for each delivery from suppliers, and labor and equipment costs 30% to 40% more than expected. originally budgeted, for the construction of a second location in Northern Virginia a few miles away. away in Oakton, Virginia.
So far, “we’ve made the decision to stick with and not pass these increases 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 are not likely to run dry. But they could be tempered, she said.
“I’m not sure I’d go so far as to say there will be a shortage. Individual producers may have problems, but this is not so widespread that you see empty beer shelves,” Watson said. “I think the brand of beer that consumers want to occasionally run out of is more accurate. And brewers can make fewer or different beers.”
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’re refilled. “Oxygen is the demon of beer and it will kill a beer if it has oxygen in it,” Aaron said.
But many breweries have struggled to get the CO2 they need. A major contributor is that a natural source of CO2, the jackson domean extinct volcano in Mississippi, “is facing a contamination problem with raw mine gas, which creates a significant decrease in available food-grade CO,” Watson told the brewers in a July report.
High demand and some closures at ammonia plants, which create and capture CO2 to sell to other industries, have exacerbated the shortage. So have rail disputes, which have disrupted deliveries, wrote Forbes columnist Richard Howellsa supply chain executive.
“Yes, you heard right,” Howells wrote. “In this era of trying to reduce CO2 emissions into the atmosphere, we’re actually going to have a shortage of the CO2 that provides the carbonation so loved by millions of concerned beer drinkers.”
How are breweries coping with CO2 shortages?
Most have had to pay more for CO2, while many have had to find alternative suppliers. And if a brewer can’t get enough, that could lead to some beers not being made, said Tomme Arthur, co-founder and principal operating owner of port brewing Y the lost abbey in San Diego County, California.
“I don’t expect 18 packs of beer to be missing from supermarket aisles,” he said. “But your local craft brewer certainly runs the risk of having to adjust brewing schedules and products based on this lack of CO2 and the need for it in many brewing practices.”
At Jersey Girl Brewing, the cost has doubled in the past year, from about 20 cents a pound to 44 cents.
Aaron said he’s been “watching the bill price go up and up and up as we fill” the brewery’s bulk tanks capable of holding 1,500 pounds of gas.
Aaron also had to decide not to make some beers, such as a Helles lager, because the German beans needed were too expensive with rising shipping prices. And some beers that need international hops from New Zealand have not been produced.
“Hopefully, once the prices are back in line, we’ll be able to reintroduce them to the market,” he said.
earlier this week Axios reported that a “beer shortage in the US looms with a gap in carbon dioxide supply.” It is also noted that some breweries have equipment to capture the CO2 emitted in the brewing process, 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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Could it be more expensive?
already has the creators of Miller Lite and Coors LightY outbreak of light – as well as Stella Artois – have raised prices recently. But beer prices have risen much less than the cost of production.
The price of beer purchased to drink at home had risen about 5% as of August 2022, compared to August 2021, according to the Consumer Price Index. That’s higher than whiskey (3%), wine (2.5%) and other spirits (1.2%).
Another barometer of prices: The average cost to beer consumers increased 3.4% over the past year for the equivalent of a 24-pack of 12-oz. cans, based on prices for the week ending September 1. October 10, 2022, according to Nielsen IQ.
Beer price increases have also remained below those of other consumer goods – In general, prices increased by 8.3% compared to a year ago, and food increased by 11.4%. The price increases haven’t “stopped consumers from switching” to craft beers, imported beers or canned cocktails and soft drinks, said Bump Williams, a beverage industry consultant.
Consumers have also been buying more 12-packs and single-serving cans as they have been “changing their purchasing behavior with rising inflation, rising interest rates, rising gas prices and a declining stock turning 401k into 201k,” Williams. said. “So people are managing their affordable luxury spending a little bit differently today.”
Could the price of cans also affect the supply of beer?
Probably indirectly, as aluminum prices are just one of several costs brewers see rising. Can costs “are still much higher than they were and I think once prices go up the way we experience them, you don’t tend to see them go down again,” Aaron said.
While there has been less volatility recently, some breweries had to find a new supplier when Ball Corp., one of the nation’s largest canmakers, earlier this year it raised its minimum requirements for customersciting unprecedented demand.
“We were rushed to find an alternative supplier” who charges 1.5 cents more per unit, Arthur said. “A truckload of cans is about 156,000 units, so the pennies add up,” he said.
“I’ve never seen this level of inflationary pressures combined with outright shortages. It’s crazy, to put it mildly,” Arthur said. “I suspect almost every brewery in town is stuck on the same fronts.”
Follow Mike Snider on Twitter: @mikesnider.
