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The cost to make beer is rising

Beer tap
Posted at 2:36 PM, Apr 29, 2022

Just like people at home are feeling the squeeze of higher costs, so too are your local brewers. 

Can after can is pushed through, boxed up and shipped out of Big Storm Brewing Co. in Florida. 

"I think what makes craft beer so special is it's the epitome of community," said LJ Govoni. He's the president of the growing brewing company. 

But the cost of the craft today means the country's some 9,100 craft brewers pay more for the things that go into making it. 

"Oh it absolutely costs more to make our product today, yes," said Govoni. "I think every business has been tough the past couple of years and like I said before, we touch every part of the economy."

Govoni describes factors like labor, freight, packaging, raw material. He's looking at the cost of cans, he says up 20% to 30%, and eying where the grain goes. 

"We've had suppliers who have refused to quote us while looking at prices and looking at contracts simply because it was too expensive. We think we'll get those quotes, it's just how bad is it going to be. Depending on the malt, it's going to be anywhere from 25 to 60%," he said. 

Craft brewing is still a growth business, up 8% on nearly 25 million barrels produces, according to the Brewers Association. But like other industries and consumers, the effects of the supply chain and inflation are a focus. 

"It's really unfortunately been a perfect storm," said the organization's chief economist, Bart Watson, Ph.D.

Watson said right now the brewing industry is in flux. 

"Any one of these factors probably wouldn't lead to the level of price increases we're seeing, but you have COVID disruptions, changes in demand, climate change, war in Ukraine and you add them all together, and it's just a really challenging environment for any small business, but particularly brewers," Watson said. 

That may mean some brewers have touch choices between their prices and margins. 

"What we're seeing in the consumer price index right now is that beer prices are up about 4% year over year. Most of the increase has occurred in the last two months as brewers are starting to see that supply chain challenge, but that's going to vary a lot by the brewer," Watson said. 

In St. Pete Beach, Matthew Dahm runs a local craft brewery, Mastry's Brewing Co.

"For us, the top three things — gas prices, shipping and tourism," Dahm said. 

So far, he said they haven't had to increase the price, but explains in today's environment, it's harder to forecast the future. 

"We have had to re-evaluate what we're doing as far as the products. Some of it we've absorbed, some of it we found new efficiencies on how we do this better," he said. 

But with each pour, each glass, each challenge, brewers are looking for new solutions for the product they hope brings people together. 

"We are very proud about the beverage we serve to people in our community and we want to keep that same quality up," said Govoni.

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