Inputs. Or as the Teutonics might say "ingapüts". It's the short form for the costs of things that go into your beer. When the price of hops and malt went north in October 2007, we started reminding ourselves that when we are told costs have gone up we better check whether prices in fact have gone up. The last time we had a look was in March 2009 but there is reason to reconsider if we look, with a h/t to Tandleman, at the words of the managing director of English brewer JW Lees & Co, William Lees-Jones:
He said that although brewers and publicans have had to deal with a series of problems including three consecutive poor summers and the “ridiculous” duty-escalator tax, they had also benefited from reductions in energy and raw materials costs. The business had also imposed a pay freeze. “We feel that it would by cynical to hit our customers with increases since we have benefitted this year from reductions (in costs). Pubs must not price themselves out of the market.”
We have heard much from the British beer bloggers about the pressures of increased taxation as well as the particular effects of the weather on sale and sales. Those factors are not as critical at this point in the economics of North American beer. Even though prices in 2007 and 2009 are still cited for problems facing small North American brewers, one needs to ask where are we with critical input prices factors now in early 2010?
- The Canadian Wheat pool reports that malting barley has continued to drop with a tonne sitting at $208 in October 2009 down from $320 in January 2009. In January 2010, it sits at $211 per tonne.
- As far as hops go, while South African ones face drought, in Oregon, the hops prices plummeted in the fall of 2009 and the word "glut" is being used.
Given the recession and the associated increase in inflation, one would imagine there is no peaking of labour costs at the moment. And gasoline prices are no where near peak either. So, if there is a collapsing hop and malting barley market as well as a 9% increase in craft beer sales in the US is the consumer seeing the benefit? In the words of Mr. Lees-Jones, would it be "cynical to hit our customers with increases" in the current economic situation? Would maintaining prices not also perhaps be?