HomeBusinessIs a beer shortage on tap? Inflation and supply chain pressures on...

Is a beer shortage on tap? Inflation and supply chain pressures on brewers are intensifying


We’ve had no shortage of shortages lately. There was toilet paper and computer chips, followed by tampons and baby formula. Could the next shortage be beer related?

The potential arises when beer makers, large and small, come under pressure from a confluence of inflation and several supply chain problems. Some breweries found it challenging to get carbon dioxide (CO2), which is used to clean tanks and carbonated beer. When they get it, the price is often higher, sometimes double what they used to pay.

Also rising: the price of other ingredients such as malted barley and the cost of shipping those and other products.

All this could lead to higher beer prices. And it can lead to some of your favorite beers being out of stock or off tap.

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

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

In a semi-annual survey of membership in the association—about 5,600 small and independent breweries in the US—some brewers’ sentiments came down to: “We’re selling as much beer as before the pandemic, but making much less from that beer, and we Not sure how long that will keep,” Watson said.

Gas prices rise after declines: Here gas is cheapest and most expensive

What does it mean to you?: Fed raises interest rate by 0.75 percentage point to curb inflation

Why would there be a beer shortage?

Because breweries, accustomed to a number of supply chain problems, face a growing list of headaches. The price and availability of aluminum cans became increasingly volatile as cans became crucial to the survival of breweries. Many had switched to off-site collection and distribution during the national shutdown caused by COVID-19.

Conor Provost of the Bluejacket brewery in Washington, DC, puts beer into a car in April 2020. The brewpub began offering street-side pickup and delivery as the coronavirus shutdown began.

Conor Provost of the Bluejacket brewery in Washington, DC, puts beer into a car in April 2020. The brewpub began offering street-side pickup and delivery as the coronavirus shutdown began.

Similarly, the supply of CO2 “has remained tight since the spring 2020 shortages,” Watson said in a recent report. Breweries often got less than they ordered – or worse, they didn’t deliver any promised quantities at all.

Must Read
Bernie Sanders blasts Kroger’s $24.6B Albertsons deal, calls it ‘absolute disaster’

Now inflation has pushed up the total cost of breweries’ shopping list, just as it has done for all Americans. That means breweries are likely to pay more for CO2, cans, stationery, malt (grains needed to make beer) and hops.

“What’s unprecedented is the number of areas where we see challenges,” Watson told USA TODAY.

Inflation: No more steak. Order less. This is how inflation is putting pressure on American diets.

Settle Down Easy Brewing Co. in Falls Church, Virginia, hasn’t been hit hard by carbon price hikes, but is paying an extra two cents per can for its canning line, bought during the pandemic, said co-owner Frank Kuhns.

But other price hikes have hit harder, including $150-$300 “gas travel costs” for each delivery by suppliers, and labor and equipment costs of 30% to 40% more than originally budgeted, for the construction of a second site in Northern Virginia, a few miles away. away in Oakton, Virginia.

So far, “we’ve made the decision to keep these increases and not pass them on to the customer and instead look for new suppliers or cut costs without sacrificing quality,” Kuhns said.

Frank Kuhns, co-owner of Settle Down Easy Brewery Co., in Falls Church, VA.

Frank Kuhns, co-owner of Settle Down Easy Brewery Co., in Falls Church, VA.

Despite the dilemma, the country’s beer taps are unlikely to dry up. But they can be tempered, he said.

“I’m not sure I would go so far as to say there will be shortages. Individual producers may have issues, but this is not so widespread that you will see empty beer shelves,” Watson said. “I think the beer brand that consumers want to be out of stock every now and then is closer to accurate. And brewers can make different or fewer beers.”

Why is carbon dioxide needed to make beer?

Most beer aficionados know that brewers use CO2 to carbonize beer. But CO2 is also used to clean fermentation tanks and keep oxygen out before refilling. “Oxygen is the devil of beer and will kill a beer if you have oxygen in it,” Aaron said.

But many breweries have had a hard time getting the CO2 they need. An important cause is that a natural source of CO2, the Jackson DomeAn extinct volcano in Mississippi, “is facing a contamination problem with the mine’s raw gas, significantly reducing available food-grade CO,” Watson told brewers in a July report.

Must Read
Stocks waver as earnings roll in, yields charge ahead

High demand and some closures of ammonia plants, which produce and capture CO2 for sale to other industries, have exacerbated the shortage. As well as railway disputes, which have disrupted supplies, wrote Forbes columnist Richard Howellsa supply chain executive.

“Yeah, you heard right,” Howells wrote. “In this era, when we’re trying to reduce CO2 emissions into the atmosphere, we’re actually going to be short of the CO2 that provides the carbonation so loved by millions of concerned beer drinkers.”

How are breweries dealing with the CO2 shortage?

Most had to pay more for CO2, while many had to look for alternative suppliers. And if a brewer can’t get enough, it can lead to some beers not being made, says Tomme Arthur, co-founder and chief operating owner of Port Brewing and The Lost Abbey in San Diego County, California.

“I don’t expect the supermarket aisles to miss 18 packs of lager,” he said. “But your local craft brewer is certainly at risk of adjusting brewing schedules and deliveries based on this lack of CO2 and the need for it in so many of the brewing practices.”

At Jersey Girl Brewing, costs have doubled in the past year, from about 20 cents a pound to 44 cents.

Aaron said he’s seen “the bill price rise and fall as we fill” the brewery’s bulk tanks that can hold 1,500 pounds of gas.

Aaron also had to decide not to make some beers, such as a Helles lager, because the German grains needed were too expensive with higher shipping costs. And some beers that require New Zealand International hops have not been produced.

“Hopefully we can bring these back to market once prices are back in line,” he said.

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

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

Earlier this week, Axios reported: that a “American beer shortage looms with a gap in the carbon dioxide supply.” It also noted that some breweries have equipment to capture the CO2 emitted during the brewing process, but it is very expensive.

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

Must Read
3 charts that show the UK's market meltdown

What is everyone talking about?: Sign up for our trending newsletter to receive the latest news of the day

Can beer become more expensive?

It already has. The creators of Miller Lite and Coors Lightand Button light – as well as Stella Artois – have all recently raised prices. But beer prices have risen much less than production costs.

The price of beer bought to drink at home, according to the Consumer Price Index, increased by about 5% from August 2022 compared to August 2021. That is higher than whiskey (3%), wine (2.5%) and other spirits (1 .2%).

Another price barometer: The average consumer beer price has increased by 3.4% in the past year for the equivalent of a 24-pack of 12 oz. cans, based on prices for the week ending September 10, 2022, according to Nielsen IQ.

Beer price increases also remained below those of other consumer goods – overall prices increased by 8.3% compared to a year ago, and food by 11.4%. Price hikes have not stopped consumers from trading craft beers, imported beers or canned cocktails and seltzers, said Bump Williams, a consultant to the beverage industry.

Consumers have also been purchasing more 12-packs and single-use cans, as they have “changed their buying habits with rising inflation, rising interest rates, rising gas prices and a falling stock market turning 401k’s into 201k’s,” Williams said. “So people are managing their affordable luxury spending a little differently these days.”

Jersey Girl Brewing Co's flagship beers.  in Hackettstown, NJ

Jersey Girl Brewing Co’s flagship beers. in Hackettstown, NJ

Can the price of cans also influence the beer supply?

Probably indirectly, as aluminum prices are just one of many costs that brewers are seeing rising. The cost of cans “is still much higher than they used to be, and I believe that once prices go up the way we’ve experienced them, you usually don’t see them go down,” Aaron said.

Although there has been less volatility lately, some breweries had to find a new supplier when Ball Corp., one of the largest can makers in the country, earlier this year increased the minimum requirements for customersciting an unprecedented question.

“We were sent out to find an alternative supplier,” which charges 1.5 cents more per unit, Arthur said. “A truckload of cans is about 156,000 units, so the pennies are going up,” he said.

“I’ve never seen this level of inflationary pressure combined with outright deficits. It’s crazy to say the least,” Arthur said. “I suspect almost every brewery in town is bogged down on the same fronts.”

Follow Mike Snider on Twitter: @mikesnider.

This article originally appeared on USA TODAY: Beer: Would there be a shortage? Inflation, supply chain problems persist

RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Recent Comments