How the war in Ukraine could send brewery prices soaring
CLEARWATER, Fla. - The Russian-Ukrainian war sent prices soaring for wheat, barley, and other grains produced in the region. That could soon trickle down to the beer being poured and canned at Bay Area breweries.
Ukraine and Russia are two of the world's top barley exporters. Since the invasion, the price of barley – a main ingredient in beer – has jumped 27.1%, according to the Food and Agriculture Organization of the United Nations.
Even before the invasion, the national price of beer rose 2.2% from January to February, the largest monthly increase in a decade. It's yet another blow for breweries that have already fought through the pandemic, staffing and supply chain issues, price inflation, and now, the war.
"Our base malt that we use, we use it in almost every single beer," said L.J. Govoni, co-owner of Big Storm Brewing Company. "That is the backbone of most things we brew. It's going to go up next year and between 30 to 50%."
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"Grain, aluminum for cans, shipping across the board, just about everything that goes into this business has increased in price in the last 12-18 months," said Christopher Price, head brewer and co-owner of Dissent Craft Brewing with locations in St. Pete and Lakeland.
While major brewers so far have been able to absorb the costs, craft brewers are forced to consider raising their prices if supply costs continue to increase.
"We raised prices going into this year, like everyone else did, right?" said Govoni. "Labor got more expensive, a lot of stuff got more expensive. If this continues, we and almost everyone else will also have to raise their prices."
At Big Storm, that could mean $1-2 more per pint. Dissent, on the smaller end, hasn't had to touch prices yet. They'll hold out as long as they can.
"We deal with the bigger suppliers in the industry," said Price "So inevitably, it's going to flow down to us. We quite haven't felt it just yet, but I'm sure it's coming."
Before the invasion, barley prices in the U.S. were already up due to a drought that impacted production. How much Russia and Ukraine might impact American brewers remains to be seen. Many of them operate contract by contract with grain suppliers and are preparing for rates to go up significantly.
"We've had suppliers, when we called them and started pricing around for next year's contracts, before they quote us, they stop and giggle almost somewhere between embarrassment and concern," Govoni said. "And they say we're not going to quote you at this time because it's just gone up that much."