Bush is behind this, I just know it!

Bot

---------------------

Mounting cost of beer ingredients could send prices hopping
08:27 AM CDT on Saturday, October 27, 2007
JACKIE JOHNSTON/The Associated Press

SUNNYSIDE, Wash. – Fans of Snipes Mountain Brewery's cloudy Hefeweizen relish the subtle wheat flavor of the bright, summery brew, and, like beer drinkers everywhere, they know when their favorite brew tastes a little too hoppy or bitter.

Small, independent brewers like Terry Butler, brewmaster at Snipes Mountain Brewery in Washington state, have few choices: tinker with recipes for their increasingly popular beers and raise prices - perhaps as high as 10 percent. Connoisseurs could be in for a surprise this year, and they may not be alone.

A worldwide shortage of one key beer ingredient and rising prices for others could force small brewers from Australia to Oregon to tweak their recipes or experiment less with new brews.

And one other thing: Beer prices are likely to climb. How high is anybody's guess. Unlike their industrial rivals, craft brewers don't have the means to hedge against rising prices.

"I'm guessing, at a minimum, at least a 10 percent jump in beer prices for the average consumer before the end of the year," said Terry Butler, brewmaster at Washington's Snipes Mountain.

Sales have been relatively flat in recent years among the country's big three brewers – Anheuser-Busch Cos., Molson Coors Brewing Co. and SABMiller PLC unit Miller Brewing Co – while small, independent brewers have experienced tremendous growth.

The craft brewing industry experienced a 12 percent increase by volume in 2006, with 6.7 million barrels of beer. Sales among microbreweries, which produce less than 15,000 barrels per year, grew 16 percent in 2006.

Now the bright spot in the brewing industry is facing mounting costs on nearly every front:

• Fuel, aluminum and glass prices have been going up quickly over several years.

• Barley and wheat prices have skyrocketed as more farmers plant corn to meet increasing demand for ethanol and others plant feed crops to replace acres lost to corn.

• A decadelong oversupply of hops that had forced farmers to abandon the crop is gone, and harvests were down this year. In the U.S., which grows one-fourth of the world's hops, acreage fell 30 percent between 1995 and 2006.

Australia endured its worst drought on record. Hailstorms across Europe damaged crops. Extreme heat in the western U.S. hurt both yields and quality.

Big brewers can hedge against rising prices for raw ingredients and can negotiate better, longer-term contracts for ingredients, but smaller brewers are generally get whatever is left.

Snipes Mountain saw its barley malt prices grow from 10 percent to 15 percent this year, and the brewer paid $12.35 per pound for Cascade hops, far beyond the $5.60 per pound allotted last year.

Brewers at Tommyknocker Brewery in Idaho Springs, Colo., have already been doing some tinkering. Last year, a slim supply of bittering Hallertau hops forced them to substitute the Mount Hood variety, which slightly altered their three lagers: Alpine Glacier Lager, Butt Head Bock and Ornery Amber Lager.


JACKIE JOHNSTON/The Associated Press
During the last decade, a surplus forced farmers to grow crops other than hops, which gives beer a distinct bitterness.