enlarge Doug Jones/Staff Photographer

Ryan Fitch moves a beer keg on the filling line at the Shipyard Brewery in Portland.

enlarge Doug Jones/Staff Photographer

Analysts say it is inevitable that beer makers, especially smaller microbreweries, will be forced to raise prices.

enlarge Doug Jones/Staff Photographer

Paul Hendry empties a bag of barley malt into the hopper at Portland’s Shipyard Brewery. A drought in Australia has cut production there and contributed to higher prices in the U.S.

Climate change, globalization and agricultural economics are coming to a head, resulting in more expensive beer.

Rising prices for barley malt and shortages of some varieties of hops mean that the price of a six-pack – whether it's from a multinational brewer or a local, small-scale craft-beer maker – is likely to rise.

"It's a tough time," said Alan Pugsley, a partner and master brewer at Shipyard Brewing Co. in Portland. "I don't think it's going to get better anytime soon."

The price for barley malt – the primary ingredient in beer, along with water – has more than doubled in the past two years. Prices for hops – the ingredient that determines a beer's flavor, color and aroma – have at least doubled, and in some cases risen to five times what they were a year or two ago.

And that's if you can get hops – almost all are in short supply, and some varieties simply aren't available.

In addition, the glass bottles that are filled with beer are more expensive, along with the cardboard used to make six-pack holders and cases.

And transportation bills are climbing as fast as the price of fuel, adding up to a big increase on the expense side of brewers' ledgers.

"It's a big whammy," said Paul Gatza, director of the Brewers Association, a trade association for beer makers.

At Shipyard Brewing, Pugsley said the company plans to set new prices in the next few weeks, and it's a given that they're going up, although the exact amount hasn't been determined.

He said the brewery has contracts that ensure it will have a sufficient supply of barley malt and hops, but prices are up sharply.

Climate change may be one factor. An Australian drought that some experts blame on global warming has cut that country's barley production in half, while European floods earlier this year led to sharply lower yields of hops there.

Many beer producers in Australia and Europe are looking to the U.S. and Canada to make up for those shortfalls, turning barley and hops into global commodities, which drives up prices and further reduces the supply.

In addition, some farmers have switched to growing corn, which commands a higher price because of its use in alternative fuels, cutting the acreage devoted to barley and hops.

A study presented to Gatza's organization last week found that acreage devoted to growing hops in the U.S. fell from more than 44,100 in 1996 to less than 30,000 last year.

Global hops acreage last year was just barely more than half what it was in 1996, and the yield is just 63 percent of what it was a decade ago.

"It's two or three years of changing weather and this growing pressure to go to alternative fuels," Pugsley said. "Consumers don't like to see prices go up, but the bottom line is that they have to go up."

Gatza said he expects that both national and regional brewers will have to raise prices, but will have adequate supplies of barley malt and hops.

Microbrewers, who produce a few hundred barrels a year compared to the 80,000 or so that Shipyard expects to roll out this year, are probably going to get squeezed.

"It wouldn't surprise me if some of these guys can't stand the supply (problems) and price increases. That's the big fear – that some people may go under because of this," Gatza said.

Rising prices might prompt some beer drinkers to take matters into their own hands, said Ed McDowell, owner of the Hop Shop in Gray, which caters to the home beer and wine maker.

McDowell said he's had to raise prices, too – hops that were $1.25 an ounce are now 75 cents more, and a 55-pound bag of barley malt has risen from $48 to $54.

But while craft brewers might end up charging $10 a six-pack to cover their higher costs, he said, a home brewer can make a high-quality beer for the equivalent of $5 a six-pack. And home brewing is already popular, he said.

"I'm having a hard time keeping kits in stock."

Pugsley and Gatza said...