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There is no question that the price of beer has increased over the last 5 years. In fact, beer prices peaked near the end of 2022 at nearly 10% up from 2019 prices. However, it's not as bad as it could be. The raw inputs for the beer making process are up 20 to 40%. So, why exactly have costs gone up and why is beer so expensive right now?
To answer this question we'll look at the inputs required for making beer. We'll also brew our own beer. Because, to really understand the pricing problem, we need to understand the process of making beer and understand the product as well.
Brewing an Expensive Beer
Before we get into the reasons why the price of beer has gone up, let's get started with the beer. We're going to brew what we're calling an "$8 Pint." It doesn't really cost us that much to make. In fact, the grand total for our ingredients worked out to cost about $50, meaning that our beer cost about $1.34 per pint (exclusive of equipment costs, our time, etc.). And by the way, this beer ended up being quite spectacular. We 100% recommend brewing it.
Here's what we used to make the beer:
- 8.11 gallons water
- 11.5 lbs malted barley
- 1.5 lbs white wheat malt
- 1 oz Simcoe hops
- 3 oz Citra hops
- 3 oz Mosaic hops
- 1 Package American Ale Yeast
To make the beer we used the following process:
- Heat the water to 152F
- Mill grain and add to kettle
- Mash for 60 minutes
- Pull the grain basket and heat to a boil
- Once boiling, set a timer for 60 minutes
- Add .5 oz. of Simcoe hops at the start of the boil
- Add .5 oz. of Simcoe with 10 minutes left in the boil
- Add 1 oz. of Mosaic and 1 oz. of Citra once the heat is turned off at the end of the boil.
- Allow hops to steep for 20 minutes while the temperature falls
- After steeping, chill the wort to 70F
- Transfer to a fermenter, add yeast, and aerate
- Allow to ferment for 4 days then add 2 oz. of Simcoe and 2 oz. of Mosaic
- Once fermentation is complete, transfer to a fresh keg, chill, carbonate, and serve
Why is Beer So Expensive
Before we get back to how the beer turned out, let's talk about the primary reasons why beer has be come more expensive. The way we see it, there are 5 reasons for this:
- Natural Gas Price Manipulation
- Barley Shortages
- Aluminum Price Gouging
- Co2 Shortage
Let's talk about each of these in order to make a case for our argument. First, inflation.
It's no secret that post-covid inflation is causing the price of pretty much everything to go up. Things have started to come down in 2023 and 2024, but we're still not back to 2019 levels. For example, labor costs are up as a result of this. Because labor is pretty significant input in the beer making process, it's definitely contributed to the price increase.
Natural Gas Price Manipulation
According to the International Energy Agency, the price of natural gas has gone up as the supply has tightened. This is partly due to intentional manipulation by Eastern governments and also partly due to sanctions.
Ukraine is the world's third largest supplier of barley. According to CNN, due to the ongoing conflict in that country, as well as blockades, their contribution to the global supply has diminished. This has caused the price of barley to increase.
Aluminum Price Gouging
According to The Beer Institute, the price of aluminum increased in 2018 as a result of a 10% tariff imposed on foreign aluminum. However, prices went up across the board due to manipulation of what is known as The Midwest Premium. This has caused the beverage industry (and consumers) to increase a total of $8 billion in increased aluminum costs.
The fouling of a CO2 "mine" as well as other supply chain disruptions caused an imbalance between the supply and demand of this very important beer input. As a result the price went up and has yet to drop down to "normal" levels
All of these increases, as well as a few others, have cause the price of beer to increase. However, these aren't the only things driving the price up beer upwards. In our opinion perhaps the most significant reason for the increase in the price of craft beer, specifically, are the recipes.
Beer Recipe Costs
When examining the price of beer, one cannot ignore the fact that not all beer is equal. Some beer costs more to buy because it simply uses more ingredients, as as well as more expensive ingredients.
Take for example an imperial stout that has vanilla beans, coffee, and other goodies added to it. Also assume that this beer has been aged in a barrel for several months. For many reasons, shis product is going to cost much more to make than something like a light lager.
An imperial stout could have an alcohol by volume percentage well above 10%. To achieve this, 2-3 times the amount of malts are used as are needed for a light lager. Vanilla may add a nice touch to the flavor and aroma, but it costs $200 per pound! And when beer is aged there are carrying costs that must be paid by someone. If a brewery making such a process wants to stay in business, it's going to need to charge quite a bit more for an imperial stout than a light lager.
The number of craft breweries in the U.S. has skyrocketed since the early 2000's. With the supply increase and competition, you'd think that prices would fall. However, interestingly, the opposite seems to be happening. Trends in craft brewing wax and wane, but for the most part, breweries are moving towards more complicated, more unique, more fancy beer offerings, as a way to differentiate themselves. And most often these new offerings are more "extreme" than a run of the mill pint (bigger grain bills, more hops, more specialty ingredients). Naturally, this is causing prices to increase.
The Results of Our Beer
We added more hops to our beer than we normally do. We also dry hopped, which required extra effort and also caused a slight reduction in the amount of liquid available for consumption. So our "Overpriced IPA" cost a bit more for us to make than normal. Is it better? Well, honestly, it actually is. The extra hops and the dry hop addition really did a lot to improve the aroma and flavor.
So, why is beer more expensive? Well, a lot of factors are at play. Inflation is definitely one. Supply chain disruptions are a few others. But the general increase in the complexity of beer recipes cannot be ignored.