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NEWS: Higher Prices Brewing For Craft Beers

HopsPhoto of Czechoslovakian hops vines by Dušan Gavenda | IST.   What revelers at next week’s Great American Beer Festival won’t be discussing is the higher prices forthcoming on their brews of choice. While the segment grew 11% the first half of this year, the cost of materials is growing as well. As reported today in the Wall Street Journal, poor harvests, the week dollar and farmers’ shifts to more profitable crops have caused the price of hops and barley to rise—the largest ever faced by the industry. Malting barley, which gives beer its color and sweetness, is less a profitable crop than corn, in demand for biofuels like ethanol. Hops, which provide aroma and bitterness, are commanding higher prices because of poor crops in Europe (hops are also grown in America’s Pacific Northwest). At the same time, the acreage devoted to hops has decreased by half over the past dozen years because of a previous glut of hops.
According to the Wall Street Journal, the cost pressures could slow the expansion of American craft brewers and even put some smaller ones, who have not locked in contracts for hops and malt, out of business. Big brewers face the same cost increases, but they use far fewer hops and barley in most of their beers, which is why they are lighter in taste (and calories). A barrel of Sierra Nevada Pale Ale, for example, has about twice the malt and up to five times the hops of a mass-market brew like Budweiser or Miller. As in any industry, large manufacturers have the finances to to secure long-term contracts that protect against rising costs of materials. Now, smaller brewers are trying to do the same, and some are tweaking their recipes to see what they can do without the European hops they’ve always relied on.




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