(Bloomberg) – All that talk about inflation could make you want to drink. But even that could get more expensive every day.
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Around the world, beer input costs are skyrocketing driven by shrinking barley supplies and rising aluminum costs, in addition to already known bottlenecks in labor and transportation. that cause a domino effect in the rest of the industries.
As a result, AB InBev, the world’s largest brewer, recently raised its prices in some markets, including Brazil, Colombia, Mexico, Nigeria and China, CEO Michel Doukeris said this week. Brewery Heineken NV says it is being “assertive” in raising prices to offset the impact of rising raw material costs. For its part, Sam Adams’ maker Boston Beer Co. plans a single-digit price increase in 2022, which “will seem reasonable” in the “context of everything else,” said CEO David Burwick.
“Everything is going up in price; We don’t think it’s going to go down much, ”Burwick said on a recent earnings call when asked about inflation. Hopefully, he said, the company’s customers, who are already used to paying a premium for craft beer, will be able to bear rising prices. “We are not going to raise them as much as our costs have.”
In recent months, input costs have risen globally, across all industries, driven by a confluence of events: extreme weather destroying global crops, labor shortages crippling the transportation sector, traffic jams in many of the world’s largest ports; and the worsening energy crisis in Europe and Asia. But for the global beer industry, rising commodity costs couldn’t have come at a worse time, as it is just beginning to recover from the coronavirus pandemic that closed bars, restaurants and sports venues around the world.
In the top 20 spirits markets accounting for 75% of global consumption, beer showed a recovery in the first half of 2021, with volumes increasing 7.5% compared to the same period in 2020, according to Brandy Rand. , Director of Operations for the Americas at data provider IWSR Drinks Market Analysis. Still, compared to the first half of 2019, total beer volume was down 5.7%, he noted.
“The pressure is coming from everywhere,” said Brett Ireland, CEO of Bearhill Brewing, who anticipates spending up to 7% more on malt at its four brewpubs in Alberta, Canada.
Barley prices are largely to blame for rising beer costs, after dry weather burned through fields in North America, which generally produces enough barley to account for about 20% of global commercial beer production. . The European Union also had to cut its estimate of the barley crop after rain affected quality. In Canada, the production of this grain was reduced by 34%, while American farmers recorded the smallest harvest since 1934, just after Prohibition ended.
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