The cost for barley and hops, the two main ingredients in beer, have risen 30-40% over the past year. For craft brews that means consumers can expect to pay $5 a pint and $9 a six-pack. This is very distressing news.
“Our ingredient costs are up 40 percent from last year,” said Rob Widmer of Widmer Brothers Brewing, one of the largest craft brewers in the country after its recent merger with Redhook. “We’re talking about how much we’ll eat and how much we’ll have to pass along.”
Call it a quadruple whammy: Hops and barley acreage has been declining — hops because of a 10-year glut and barley because many farmers are planting corn for ethanol instead. Ethanol has also diverted corn from the feed market, often making it more lucrative to sell barley for feed instead of to the malting houses that supply brewers.
But wait, there’s more: Two years of failed hop crops in Europe, a 2006 warehouse fire in Yakima that destroyed 4 percent of the U.S. crop and two years of disastrous barley harvests in Europe, Australia and Ukraine. Factor in a weak dollar that has the world clamoring for our hops and barley and you have the makings of a uniquely bad patch for brewers and consumers.
It’s bad news for Oregon, where all our 60 or more brewing companies are craft brewers and where we consume craft beer at three times the national average. The beer industry has a $2.24 billion impact on the state’s economy, says the Oregon Brewers Guild.
Let’s just hope this isn’t as bad as expected.