Brewhaha

[Brad Bowers]

The consolidation game continues to ratchet up, as just last Friday, Carlsberg and Heineken grabbed up Scottish & Newcastle (among their brands: Newcastle Brown Ale, Foster’s, and Kronenbourg 1664), and plan to divvy up the business between them.

Here in North America, Molson Coors, formed from the merger of those two brewers three years ago, announced plans late last year to merge with SABMiller so that they may better compete with Anheuser-Busch.

The beer industry seems to be coming late to the consolidation game, as most industries have been undergoing this for a decade or two, or even longer. Market forces have driven these international mergers in an attempt to fight escalating costs and declining revenues.

What does this have to do with the price of tea in China? Nothing, but it has everything to do with the price of beer everywhere. I picked up a six pack of beer over the weekend and paid $9.29 for something that once cost me seven bucks and change just a year or so ago.

Droughts and floods, have reduced the current crops of barley and hops, but prices have also climbed ever higher because farmers are switching production to corn for the anticipated “ethanol boom.” (I would make disparaging remarks about ethanol, but political discussions aren’t allowed.lol )

The crisis has so affected the hops market that there is a waiting list for the crop, with the large brewers getting first pick. America’s craft-brew renaissance is being hit hard, to the point that brewers are experimenting with changes in their beer recipes to make do with fewer or no hops. Will customers be understanding when their favorite beers change flavor?

The markets will eventually regain equilibrium among barley, hops, and corn, but I have a feeling the prices won’t ever be going back down.

Anyone else notice prices going up in their part of the world?


Brad

 

[Tomasso]

The consolidation game continues to ratchet up

Tell me about it, check out InBev's line-up.

 

[jamespowers]

Tell me about it, check out InBev's line-up.

Thanks for the stock tip.

 

[Dixon Cannon]

Yep! I knew where this was going when Brains bought Buckley's.

-dixon cannon

 

[Nathan Flowers]

I have noticed that six packs of my favorite microbrews and imports have jumped by $1-2 per.

 

[dnjan]

The crisis has so affected the hops market that there is a waiting list for the crop, with the large brewers getting first pick. America’s craft-brew renaissance is being hit hard, to the point that brewers are experimenting with changes in their beer recipes to make do with fewer or no hops. Will customers be understanding when their favorite beers change flavor?

I asked about this last night at my preferred brewpub (Hales, in Seattle), and was told by the brewers there that since they have contracts with their hops suppliers, they aren't having a problem getting the hops. Price, it seems, may be another matter. But at least one of the craft brewers is continuing on without having to change recipes.

By the way - what motivated me to ask the brewer in the first place is that they have recently been doing a number of "double dry-hopped" beers (available only at the brew pub, I believe). I would have thought they would have been conserving hops, rather than doubling, and the brewer assured m that since they were on contract with their supplier(s), it wasn't a problem.