Beer prices set to rise if droughts continue

The British Beer & Pub Association (BBPA) and several large breweries have voiced concerns about the price of future crops.

“The drought will put pressure on beer prices, as British barley is a key natural ingredient for our beer — and we need top-quality barley for brewing,” said a BBPA spokesman.

“It is difficult to quantify the impact at this stage — to some extent the brewers are partially protected by factors such as long-term fixed contracts and also buying ahead on the futures market.

“There will be pressures in the cost base, but we estimate that raw materials are anywhere between 3% and 10% of the price of beer.”

Wells & Young’s technical director and head brewer Jim Robertson predicts beer prices will increase by £3 to £5 per barrel or as much as 2p a pint if the next six weeks are dry.

“If the weather continues to be full of glorious sunshine then we will see a dramatic increase in barley prices, which will force beer prices to rise. A dry spring will have the most impact on the Maris Otter barley as it grows between March and May, and the late June and July sunshine helps ripen it. Similar conditions last year really hammered the barley as it failed to grow properly.”

Maltster James Fawcett, managing director at Thomas Fawcett & Sons, said that a drought will impact on cask-ale brewers rather than lager producers.

“Lack of water throughout the growing season can lead to high nitrogen and low yields, which are bad news for brewers,” he explained. “Higher nitrogen levels can create hazy cask ales, but don’t affect lager in the same way due to different production regimes. These conditions often lead to higher prices being commanded for poorer-quality crops. However, the drought is not countrywide and it is far too early to panic.”

Jerry Dyson, raw materials manager at Molson Coors, said: “It is still a little early for us to gauge what the spring barley crop is going to be like as planting has only just begun. Nevertheless, the very dry spring last year did affect the yield and quality of the malting barley crop and it is the impact on quality that is of most concern for us.”

The higher prices are in addition to yesterday's Budget which revealed that the price of a pint will rise between 6p and 10p.

Views from both sides of the mash tun...

Society of Independent Brewers chairman, and MD of Titanic Brewery, Keith Bott

“The 2011 drought really dealt us a ‘double whammy’ of reduced yield and poorer-quality barley, leading inevitably to higher prices for malt. This is clearly not a good time for anything that’s going to drive up beer prices: any increase, no matter how small, will hit the on-trade far harder than supermarkets and widen the imbalance in prices between them. The UK’s struggling pubs could, frankly, do without even another penny on the pint.”
Independent Family Brewers of Britain chairman Paul Wells

“Rainfall at the wrong time of year increased ale malt prices in 2011. A prolonged drought will almost certainly create the same challenge for ale brewers in 2013.”
Beer writer Pete Brown

“The weather and beer tax will cause brewers and pubs to pass on increased prices. They have no choice. We are having an awful run with the beer-duty escalator slicing margins, and then with higher prices for raw materials.”
Beer writer Roger Protz

“The impact on pubs would be disastrous if the droughts continue, especially if the barley has to be sourced from elsewhere. We are losing enough pubs as it is.”