Post by swi66 on Jul 10, 2007 5:45:43 GMT -5
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Ethanol leads to increased beer cost Since more farmers are growing corn instead of barley - a key ingredient in beer - prices for beer are expected to increase. By Zach Fox Denver Post Staff Writer Article Last Updated: 07/05/2007 01:18:52 AM MDT
Having a few too many beers may soon hurt your wallet as much as it could your liver.
The cost of beer has climbed 3 percent over the last year, slightly outpacing the rate of inflation, according to data from the Department of Labor.
And the cost of downing a brew at a restaurant or bar jumped 3.8 percent.
But the price of beer could see an even larger jump next year.
The price of barley, a key ingredient of most beers, has shot up 48 percent over the last 11 months. Since some breweries buy contracts for a year in advance, the increase in barley cost has not affected most beer prices.
"We're definitely concerned. We don't want to be in a position where to remain profitable we price our beer out of some consumers. We want to be able to keep our beer affordable," said Doug Odell, founder and brewmaster of Fort Collins-based Odell Brewing Co.
Odell said his company's production costs have gone up 10 percent to
15 percent over the last year. Since Odell buys its barley in October for the following year, the jump in its production costs is mostly from increases in the prices of energy and glass, Odell said.
The price of barley has escalated drastically, breweries and industry analysts said, in part because of a tighter supply caused by more farmers growing corn.
The advent of biofuels - such as E85, which is made of 85 percent corn ethanol - has helped push the price of corn futures up 49 percent since December 2005.
"More corn acres were planted this year than at any other time since 1944. Those acres had to come from somewhere," said Nancy Krull, director of marketing for the Minneapolis Grain Exchange, a commodity exchange.
Five of the country's largest barley-producing states - Idaho, Minnesota, Montana, North Dakota and Washington - have planted 22 percent less barley this year than in 2006, according to the U.S. Department of Agriculture. Soybean growth also has taken a large hit, dropping to its lowest acreage since 1995.
A poor barley crop last year in Europe and Australia also had an impact on prices, Odell said.
The price of hops has increased as well, in part because of an October fire in Yakima, Wash., that destroyed about 4 percent of the nation's hops supply.
The rising cost of diesel and unleaded gasoline affects production, too, from the farming of barley to the delivery of beer.
"The increase in fuel is a definite cost increase to us, but what helps us out this year is we're getting more money for our barley than we have in the past," said Bill Markham, owner of M and M Farms, a Berthoud company that grows about 250 acres of barley a year for Molson Coors.
Though Coors acknowledged it has seen a rise in the cost of raw materials, the company says it is not affected by the cost of barley as much since it has an established relationship with Colorado farmers who grow a proprietary blend.
Markham said his family has been growing barley for Coors for almost
40 years.
The cost of stainless steel for kegs has doubled over the last year, affecting the production cost of draught beer, Odell said.
A healthy beer market has kept prices somewhat in check: Beer has a national economic contribution of $189.3 billion per year and chips in $12.4 billion per year to the state of Colorado, according to the Beer Institute.
"It's not that easy to say, 'If it cost us 12 percent more, we can raise prices 12 percent.' There's a lot of competitors involved," Odell said.
Staff writer Zach Fox can be reached at 303-954-1755 or zfox@denverpost.com.
Ethanol leads to increased beer cost Since more farmers are growing corn instead of barley - a key ingredient in beer - prices for beer are expected to increase. By Zach Fox Denver Post Staff Writer Article Last Updated: 07/05/2007 01:18:52 AM MDT
Having a few too many beers may soon hurt your wallet as much as it could your liver.
The cost of beer has climbed 3 percent over the last year, slightly outpacing the rate of inflation, according to data from the Department of Labor.
And the cost of downing a brew at a restaurant or bar jumped 3.8 percent.
But the price of beer could see an even larger jump next year.
The price of barley, a key ingredient of most beers, has shot up 48 percent over the last 11 months. Since some breweries buy contracts for a year in advance, the increase in barley cost has not affected most beer prices.
"We're definitely concerned. We don't want to be in a position where to remain profitable we price our beer out of some consumers. We want to be able to keep our beer affordable," said Doug Odell, founder and brewmaster of Fort Collins-based Odell Brewing Co.
Odell said his company's production costs have gone up 10 percent to
15 percent over the last year. Since Odell buys its barley in October for the following year, the jump in its production costs is mostly from increases in the prices of energy and glass, Odell said.
The price of barley has escalated drastically, breweries and industry analysts said, in part because of a tighter supply caused by more farmers growing corn.
The advent of biofuels - such as E85, which is made of 85 percent corn ethanol - has helped push the price of corn futures up 49 percent since December 2005.
"More corn acres were planted this year than at any other time since 1944. Those acres had to come from somewhere," said Nancy Krull, director of marketing for the Minneapolis Grain Exchange, a commodity exchange.
Five of the country's largest barley-producing states - Idaho, Minnesota, Montana, North Dakota and Washington - have planted 22 percent less barley this year than in 2006, according to the U.S. Department of Agriculture. Soybean growth also has taken a large hit, dropping to its lowest acreage since 1995.
A poor barley crop last year in Europe and Australia also had an impact on prices, Odell said.
The price of hops has increased as well, in part because of an October fire in Yakima, Wash., that destroyed about 4 percent of the nation's hops supply.
The rising cost of diesel and unleaded gasoline affects production, too, from the farming of barley to the delivery of beer.
"The increase in fuel is a definite cost increase to us, but what helps us out this year is we're getting more money for our barley than we have in the past," said Bill Markham, owner of M and M Farms, a Berthoud company that grows about 250 acres of barley a year for Molson Coors.
Though Coors acknowledged it has seen a rise in the cost of raw materials, the company says it is not affected by the cost of barley as much since it has an established relationship with Colorado farmers who grow a proprietary blend.
Markham said his family has been growing barley for Coors for almost
40 years.
The cost of stainless steel for kegs has doubled over the last year, affecting the production cost of draught beer, Odell said.
A healthy beer market has kept prices somewhat in check: Beer has a national economic contribution of $189.3 billion per year and chips in $12.4 billion per year to the state of Colorado, according to the Beer Institute.
"It's not that easy to say, 'If it cost us 12 percent more, we can raise prices 12 percent.' There's a lot of competitors involved," Odell said.
Staff writer Zach Fox can be reached at 303-954-1755 or zfox@denverpost.com.
