Beer Prices Going Mile High

If you think gas prices are getting outrageous, just wait 'til you see what's happening to your local beer prices!  Going out for a beer these days is going to start putting a bigger dent in your disposable income.   So why is the price of beer going up so much this year? Lots of reasons and it's not just the cost of gas.

A Hoppin' History

The price of hops, a key bittering ingredient in beer, has gone through the roof in 2008.  A little more than a year ago, a pound of hops was selling for $2-$3 a pound.  Today, that same pound is selling around $26 an ounce!  Why is that?  To answer this question, you need a little history lesson in hops.

The peak of hop growing happened back in 1992 when a highpoint in planted hop acreage hit 236,067 acres worldwide.  During this time is was common to see massive amounts of surplus hops going unsold.  Excess hops were converted into extracts and stored for 2-3 years.  Due to the glut in hops, farmers started planting and harvesting less hops.  In 2006, the total number of acres of hops planted fell to around  113,417 acres.   Less than half of the total acreage of 1992.   This output was more in line with demand.  That is until 2007. 

During 2007, many European countries experienced major losses in their hop crops due to bad weather.  Hail damage, drought and heat dropped output considerably in many strains of hops.  Top that off, there were big losses in America as well when a large warehouse fire destroyed a large amount of the hop crop in the Pacific Northwest  The result, major shortages of hops.  This is costing brewers about $8.50 to $17 more per beer barrel (31 gallons) brewed.  Even malt prices are 40% higher than last year.

Currently, hop supplies are 10-15% below demand.  2009 is expected to be worse.  The good news is that farmers have planted more acres for hops this year. But yields will be low for the next several years before plants mature.  Homebrewers and many breweries are starting to grow their own hops as well.  However, severe weather incidents have been on the rise over the last decade and are ruining crops.  Drought, heat and pests were also hurting crops.

Bottom line, with the hop crop hurting some hops varieties are either scarce or not available at all this year.  And as a result hop prices went sky high.  Hop suppliers are carrying less than half the varieties this year than they did last year due to inability to obtain certain types of hops.  Despite all this, beer demand grew 16% in 2007 over 2006.  So what has all this done to the price of a pint of beer locally?
 
What's it gonna cost me?

Macro beers (like Bud, Coors and Miller) are still selling cheap as the big brewers have long standing contracts for maintaining malt and hop supplies and can avoid or even absorb some of the higher costs.  At a local Greeley store, a 30-pack of Old Milwaukee was selling as low as $14.99.    Craft beer lovers are not as lucky and are feeling the pinch the most.  Most 6-packs of microbrew beer went up between $1.50 and $2.00 and are selling between $6.99 and $7.99.  Some of the more hoppier and higher alcohol microbrews are selling for much more.  Some as high as $12 to $14 for a 4-pack!  Ultra-premium beers can go as high as $8.00 for just one 12-oz bottle.  Yikes!

The sticker shock becomes more evident as you head out to the pubs and restaurants.  According to PintPrice.com, the average price for a pint of beer in the USA as of May 7, 2008 was at $4.05.  I went looking around for a few examples around my area.  In Greeley and Fort Collins, a pint of macro beer is selling around $3.50 a pint.  A pint of micro brew was selling anywhere between $4.00 and $4.25.  A premium beer (import or imperial) was selling around $4.75 to $5.00 a pint.

Total paranoia really sets in when you head to a big league stadium.  There, you'll end up paying from $5.50 a pint for the macros all the way up to $9.00 for a premium beer in a plastic cup. 

There are, however, still some bargains to be had if you want only macro brew.  The Walrus in downtown Boulder will sell you a macro beer for as cheap as $1.75 between 4-9pm Monday through Saturday.  Jackson's Sports Rock near Coors Field has (macro) beer as low as $1.50 during happy hour.  Homebrewing your own beer can save you some money in the long run if you brew in quantity and can be a lot of fun in the process.  Or how about those $2 Fat Tires and Old Chub over at Foolish Craig's in Boulder!  Get 'em while they still last.

Are you getting every drop you paid for?

There have been reports across the nation that some watering holes have begun skimping on how much beer is actually being put into your pint.  A pint is 16 ounces, and when poured properly, a 16oz glass normally has between 1.5 to 2 ounces of foam (head).  However, some sneaky establishments are buying pint glasses with a much thicker glass at the bottom that looks like the same size as a pint glass yet only hold 14oz of liquid.  And given the same 1.5 to 2oz of head, you're only getting 12oz of beer but paying for 16oz.  A less reputable drink establishment can squeeze a couple dozen more glasses of beer out of the same keg doing this.  Customer beware.  If your beer glass bottom looks too thick, you may not be getting what you pay for.  Some pubs are now offering 18oz glasses as their standard pints.  There you will actually get a full 16oz of beer plus the 1-2oz of foam.

Prices for beer will likely keep going up in the short run as the cost of gas continues upward and the economy is in limbo.  At what point will it become too expensive to order a beer at your favorite bar?  Worse yet, some of your favorite micro brews may end up disappearing altogether for a while.  Hoppy beers like Imperial India Pale Ales (IIPA's or Double IPA's) are quickly becoming too expensive to brew.

Loyal fans to certain brands may claim that they'd be willing to pay $1 to $2 extra for a six pack, but at what point does that make you start looking for a cheaper brand?  Would you be willing to sacrifice quality for a lesser inexpensive brand?

What's ahead?

2009 is expected to be worse.  However, the good news is that farmers have planted more acres for hops this year. But hop yields will remain low for the next several years before the new plants mature.  Homebrewers and many breweries are starting to grow their own hops as well.  In the short run, some brewers will be forced to stop making certain kinds of beer or have to look for alternatives that may end up changing the way their beer tastes.  This may result in experimenting with other bittering agents like gruit and other spices.  The beers we drink today may begin to change with the times.

Will beer prices drop once the shortage is over?  Don't count on it.  Distribution costs due to high gas prices will keep beer prices up.  It will make imports and out of state beers cost more.  All the more reason to buy from your local breweries.   Are you getting fed up with higher beer prices?  Sound off and let us know what you paid recently for a beer.  Email me at:  nocobx.beer.examiner @ gmail.com
 

Topics: beer , hops , shortages , prices , pints , macros , microbrews