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WHAT'S BREWING? IT MAY BE HIGHER PRICES FOR BEER

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By SHANNON BEHNKEN, The Tampa Tribune

Published: February 2, 2008

Updated: 02/02/2008 12:22 am

TAMPA - Beer drinkers better enjoy their brew this Super Bowl Sunday.

Going forward, they'll have to plunk down more cash, especially if craft beer is their drink of choice.

A global shortage of hops, combined with a markup on malted barley, is pushing up prices of all beer and threatens the fate of the brewpubs and microbreweries that can't afford to lock in prices with long-term contracts with suppliers the way national brands can.

"You try to hold your breath and not pass this cost along to the customer if the price is going to come back down soon, but it's hard," said Michael Bryant, owner of Dunedin Brewery, one of a handful of microbreweries in Florida. "Everything is designed for big business."

Bryant's brewery also includes an onsite brewpub, where beer has to be sold on the premises. He said he's had to increase the cost of a pint of beer in the pub by about a quarter and fears he'll have to raise prices again later this year.

He's also not selling bottled beer right now. Three months ago, the cost of bottles went up, and Bryant decided to package in kegs for now.

"Everything that uses energy is going up," he said.

Besides yeast and water, the traditional components of beer are malted barley and hops, which add the bitter tang. There's a 10 percent to 15 percent shortfall worldwide of hops, and the cost has gone up by as much as 400 percent, said Julia Herz, a spokeswoman for the Brewers Association, a Colorado-based trade group. Malted barley, although easier to find, has doubled in price in the past year.

The shortage and higher prices are expected to last at least through this year and are blamed largely on a shift by farmers to grow corn, which is more profitable now because of the demand for ethanol, Herz said. Compounding the issue, barley farmers in Europe had a bad growing season last year due to inclement weather.

Brian Fenstermacher, of Southern Brewing Supply, a wholesaler in Tampa, said the cost of hops is now about $20 a pound, compared with just $5 a pound last year. Prices on barley are now 60 cents a pound, compared with 40 cents a pound last year.

To put than in perspective, each barrel of beer uses about 60 pounds of grain and 0.7 pounds of hops, Fenstermacher said. There are 31 gallons of beer per barrel.

"We've been able to contract with all of our suppliers," said Fenstermacher, whose clients include the Dunedin Brewery and Tampa Bay Brewing Co. "A lot of breweries out there still don't have their hops secured for 2008."

Tampa Bay Brewing Co., in Tampa's Centro Ybor, has secured enough hops for the pub, but plans to expand the business are on hold, due to the hops shortage.

Head brewer David Doble said he wants to distribute beer outside of the pub and has found a microbrewery to make the beer, but he can't secure enough hops to sign a contract.

Doble said the ingredients of the beer he brews have increased in cost by 80 percent. The pub has increased prices of beer, though, only by about 10 percent. Raising prices more would threaten business, Doble said.

"I'd rather customers come in and still drink their two to three pints, rather than just have one pint because it's more expensive," Doble said. "I'd rather make money on volume."
Microbreweries and brewpubs are hit harder by the shortage and price increases than mainstream beer makers because craft beers contain larger amounts of hops to give their products a distinctive taste.

Breweries that mass produce still have to pay more for their supplies and may eventually have to pass along some of that cost to consumers, said John Houseman, brew master at the Yuengling Brewing Co. in Tampa.

Yuengling has secured enough malted barley for this year and half of 2009, but had to pay double the price. The plant has contracted enough hops to last five years, but it paid two to three times more than it paid before the shortage.

Yuengling has not raised prices, but most major breweries are considering it, Houseman said. No one wants to be the first to raise prices.

"Everyone is hoping and praying that this year's crop will be a normal one," Houseman said. "If not, we'll be in trouble. You can't brew beer without hops and barley."

Reporter Shannon Behnken can be reached at (813) 259-7804 or sbehnken@tampatrib.com

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