December 9, 2022

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Is there a shortage of beer?  Inflation and supply chain pressures are mounting on brewers

Is there a shortage of beer? Inflation and supply chain pressures are mounting on brewers

We have endured any shortages lately. there was toilet paper And the computer chips, followed by tampons And the baby milk. Could the next shortage include beer?

The potential arises when brewers, big and small, are under pressure from convergence inflation and several Supply Chain Issues. Some breweries have found it difficult to obtain carbon dioxide (CO2), which is used to clean tanks and carbonated beer. When they get it, the price is often higher, sometimes twice what they used to pay.

Also up: the price of other ingredients like malted barley, the cost of shipping it and other products.

All this can lead to higher beer prices. This may result in your favorite beer running out of stock or not being used.

“I don’t know if I could think of a scenario where there would be no beer from the brewery, but I could understand a scenario where there would be a limited supply or smaller, where the beer would have a short shelf life,” said Chuck Aaron, owner and founder jersey girl brewing in Hacketstown, New Jersey

The environment is tough enough to force some breweries to close. “This could certainly be a factor in the shutdowns,” Bart Watson, chief economist for the Brewers Association, told USA TODAY.

In a mid-year survey of union membership — about 5,600 small and independent breweries in the United States — sentiments from some brewers were, “We sell as much beer as we did in the pre-pandemic period, but make far less than that beer,” Watson said: “We’re not sure how long that will last.”

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Why could there be a shortage of beer?

Because breweries, accustomed to some supply chain difficulties, are facing a growing list of headaches. The price and availability of aluminum cans has become increasingly volatile as cans become critical to the survival of breweries. Many of them had switched to curbside pickup and off-site distribution During the national lockdown caused by COVID-19.

Conor Provost of Bluejacket Brewery in Washington, D.C. puts beer into a car in April 2020. The brewpub began offering curbside delivery, beer and food delivery at the start of the coronavirus shutdown.

Likewise, the supply of carbon dioxide has “remained tight since the shortage in the spring of 2020,” Watson said in a recent report. Breweries often get less than what I ordered – or worse, the promised quantities are not delivered at all.

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Now, inflation has driven up the entire cost of the brewery’s shopping list, Just like it happened to all Americans. This means breweries are likely paying more for carbon dioxide, cans, paper goods, barley (the grain needed to make beer) and hops.

“What has been unprecedented is the number of areas where we are seeing challenges,” Watson told USA TODAY.

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Easy Brewing Co. Settlement In Falls Church, Virginia, it hasn’t been hit hard by the carbon dioxide price increases, but it is paying an extra two years per can for the canning line, which was purchased during the pandemic, co-owner Frank Cohens said.

But other price increases were more difficult, including “gas travel” fees of $150 to $300 per delivery from suppliers, and labor and equipment costs 30% to 40% more than the original budget, to build a second site in Northern Virginia just a short distance away. Few miles away in Oakton, Virginia.

“We’ve made the decision so far to stick with these increases and not pass them on to the customer and instead look to new suppliers or cut costs without sacrificing quality,” Koons said.

Frank Cohens, co-owner of Settle Down Easy Brewery Co.  , in Falls Church, Virginia.

Frank Cohens, co-owner of Settle Down Easy Brewery Co. , in Falls Church, Virginia.

Despite this dilemma, the country’s beer taps will likely never run dry. But they can lighten up, he said.

“I’m not sure I’d go so far as to say there would be a shortage,” Watson said. “Individual producers may have problems, but it’s not so prevalent that you’ll see empty beer shelves.” “I think the brand of beer that consumers occasionally want to run out of is closer to being accurate. Breweries may make more or less different types of beer.”

Why is carbon dioxide needed to make beer?

Most beer lovers know that brewers use carbon dioxide to carbonate their beer. But carbon dioxide is also used to clean fermentation tanks and keep oxygen out before they are refilled. “Oxygen is the demon of beer and it will kill beer if you have oxygen in it,” Aaron said.

But many breweries have run into a demon getting the carbon dioxide they need. The main contributor is that the natural source of carbon dioxide, jackson domea dormant volcano in Mississippi, “is facing a problem of raw gas contamination from the mine which creates a significant reduction in available food-grade carbon dioxide,” Watson told brewers in a July report.

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High demand and some shutdowns at ammonia plants, which produce and capture carbon dioxide to sell to other industries, have exacerbated the shortage. as well as rail disputes that have disrupted deliveries, Forbes columnist Richard Howells wrote:Supply Chain Executive.

“Yes, I heard very well,” Howells wrote. “In this era, from trying to reduce carbon dioxide emissions into the atmosphere, we will actually be running short of the carbon dioxide that provides the carbonation that millions of anxious beer drinkers love.”

How do breweries deal with the lack of carbon dioxide?

Most had to pay more for carbon dioxide, while many had to find alternative suppliers. If a brewer can’t get enough, it could result in some beers not being manufactured,” said Tommy Arthur, co-founder and chief operating owner of the company. port fermentation And the lost monastery in San Diego County, California.

“I don’t expect grocery aisles to be missing an 18-pack of beer,” he said. “But your local brewer is certainly at risk of having to adjust brewing schedules and deliveries based on this CO2 deficiency and need in many brewing practices.”

At Jersey Girl Brewing, the cost has doubled over the past year, from about 20 cents a pound to 44 cents.

Aaron said he was “watching the bill price go up and up as we fill” the bulk beer tanks capable of holding 1,500 pounds of gas.

Aaron also had to decide not to make some beers, such as the Helles lager, because the German grain needed was too expensive as freight rates increased. Some beers requiring international hops were not produced from New Zealand.

“Hopefully, once prices are back to the same level, we can put it back on the market,” he said.

Chuck Aaron, owner and founder of Jersey Girl Brewing Co.  , in Hackettstown, NJ, left, and Mike Bigger, partner and vice president.

Chuck Aaron, owner and founder of Jersey Girl Brewing Co. , in Hackettstown, NJ, left, and Mike Bigger, partner and vice president.

earlier this week, I mentioned Axios That “the shortage of beer in the United States looms with a gap in the supply of carbon dioxide.” He also noted that some breweries have equipment to capture the carbon dioxide emitted in the fermentation process, but it is very expensive.

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Also competing for carbon dioxide: other industries including soft drink makers and food manufacturers. “As we’ve learned, brewers are a relatively small user of CO2 in the grand scheme of things,” Watson said.

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Could beer become more expensive?

She already has. makers Miller Lite and Cors LiteAnd the bud light – In addition to Stella Artois – they recently raised prices. But beer prices are much lower than the cost of production.

The price of beer purchased for drinking at home has increased by about 5% as of August 2022, compared to August 2021, according to the Consumer Price Index. This is higher than whiskey (3%), wine (2.5%), and other spirits (1.2%).

Another pricing metric: The average cost to consumers for beer has increased 3.4% over the past year to 24 12-ounce cans. The cans, based on prices for the week ending September 10, 2022, according to Nielsen IQ.

Beer price increases have also remained below Other FMCG – In total, prices increased by 8.3% compared to last year, and food prices increased by 11.4%. Beverage industry consultant Bombe Williams said rising prices did not “prevent consumers from even trading” handcrafted beer, imported beer or canned cocktails and soft drinks.

Consumers were also buying more 12-pack and single-serve cans because they were “changing buying behavior as inflation goes up, interest rates go up, gas prices go up, and the stock market turns 401K down into 201K,” Williams said. “So people manage their affordable luxury expenses a little differently today.”

Jersey Girl Brewing Co.'s home beer.  in Hackettstown, New Jersey

Jersey Girl Brewing Co.’s home beer. in Hackettstown, New Jersey

Could the price of cans also affect beer supply?

Perhaps indirectly, since aluminum prices are just one of the many costs brewers see an increase in. Prices for cans “are still much higher than they used to be, and I think once the prices go up the way we’ve seen them, you don’t tend to see them go down,” Aaron said.

While there has been less volatility recently, some breweries have had to find a new supplier when Ball Corp., one of the largest can manufacturers in the country, Raised earlier this year the minimum requirements of customersciting an unprecedented request.

“He sent us looking for an alternative supplier,” Arthur said, which charges an extra 1.5 cents per unit. “A truckload of cans is approximately 156,000 units, so the pennies are double,” he said.

“I’ve never seen this level of inflationary pressure paired with outright shortages,” Arthur said.

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This article originally appeared on USA TODAY: Beer: Could there be a shortage? Inflation, supply chain issues still exist