A while ago, we were all concerned. We were talking at a manic pace about craft beer prices going through the roof due to the rising cost of hops, malt and fuel. It was the talk of the town a year and a half ago. In October 2007, I asked the musical question "Are Craft Beer Prices Too Low?" and answered "No, They Are Not Too Low" much to the amusement of some who read the post and the comments that it triggered. And I've been exploring the question off and on since that time. There is still much talk about the rising cost of beer but not so much about why. Jay at Hedonist Beer Jive has met the ceiling of his willingness to spend on craft beer when he found himself facing with a $24 bottle of Russian River Consecration. And Stan notes push back related to the rise of six packs to the heady nose-bleedy price of nine bucks.
Clearly people are still concerned about price and may well be more so given the global recession - and they should be. Sure, brewers need to be paid for all their efforts but we, the tipplers, want to know we are getting value for money. I think it's safe to say that fossil fuels should not be part of the price hike justification at this time. We all know that the price of oil and gas is down worldwide with the price of a barrel of oil down almost 65% and retail gasoline selling at about the same price it was in 2005. But what of malt and hops?
- In the Czech Republic, grains were up a bit from a year ago but hops were up a whopping 15.2% from March 2008.
- In Belgium, the makers of Duval state that both hops and malt prices are high but not so high that a 25% hike in dividends isn't planned.
- Earlier this month, Jim Koch of Boston Beer announced in the Fourth Quarter 2008 Earnings Results Conference Call that...well, I can't really figure out what he announced.
- The Australian malt market is trending down...trending...down
- The Canadian Wheat Board says that malting barley prices are expected to be lower in 2009-10 due to increased supplies of malting barley with prices now down from $320 a tonne for two-row to a projection of $263.
What does this all mean? Well, for one thing, the sky did not fall as was feared in 2007. For another, with craft beer sales up and some but not all significant input costs reduced these should be relatively good times for craft brewers as long as their customers have not all lost their jobs. Which does beg the question as to the $24 bottle of beer...the question still being "why?"