Lower Fuel Prices Means Higher Beer Prices
If you drink a lot of beer, you may want to start an anti-Ethanol campaign. This could also mean a problem for the independent brewer industry or anybody that doesn’t include Budweiser, Miller or Molson. The big companies have the ability to hedge against higher wheat, barley and hop prices but the tremendous growth seen in the independent brewer industry may come to a screeching halt. Expect 10% increases right across the board for independent brewers to offset skyrocketing commodity prices. What’s the cause? Ethanol.
Barley and wheat prices are skyrocketing due to land that was once used for these crops now being used for ethanol. In addition many farmers are now using the land that was once used for barley and wheat for higher paying feed crops to offset the loss of corn as a feed crop.
As for hops which are a key ingredient to add stability and flavor to beer, acreage dedicated to hops in the United States fell 30% between 1995 and 2006.
As for the beer market, there are two certainties going forward. Expect higher prices over the near future and less new beers because experimentation costs money.
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