Beer drinkers beware: Shortage to boost costs

“Palate-wise, it may change the flavor a little bit, but only a little bit,” he said.

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

The brewery contracted for hops a year in advance, allowing it to switch back again this year, lead brewer Eric Rode said. But recipe tweaking is becoming more common, and it’s likely to continue, he said.

Those contracts also enabled Tommyknocker to hold the line on prices, with only a 50-cent increase per case wholesale, largely due to rising glass prices. The numbers could be much bigger when spiking costs of raw ingredients are factored in next year, he said.

So far, price increases have been pretty modest — less than a dollar a 12-pack at retail, said Harry Schuhmacher, editor of the online trade publication Beer Business Daily.

“Brewers are trying to take pricing up, but it’s hard when beer is pretty sensitive to pricing per volume. And when drinkers are leaving beer to go to wine and spirits,” he said.

On the other hand, smaller brewers have more pricing power than the big guys do.

“They’re able to increase pricing more without losing drinkers,” he said.

Big Sky Brewing Co. in Missoula, Mont., which distributes in 16 states, has increased the price of its Big Sky IPA by $1 a six-pack because barley prices doubled. The beer makes up only about 6 percent of the company’s line, led by the popular brown ale, Moose Drool.

Going forward, Big Sky will see what the big breweries do before making changes to pricing, brewmaster Matt Long said.

“Many of the craft brewers don’t do that. They continue to have six packs on sale half the time, and I don’t know how they can continue to operate that way,” he said. “The trend is going to be toward $10 six packs.”

But Long also said he doesn’t think that trend will last long.

“Maybe the pendulum will swing back,” he said. “It might not happen for the 2008 crop, but maybe at some point, it’ll come back halfway, which would be nice.”

It may be too soon to say if, or how high, prices might go up, said Paul Gatza, director of the Boulder, Colo.-based Brewers Association. The bigger hit for craft brewers might be to the fun side — testing ingredients and new or seasonal brews.

“I would think brewers will try to keep their existing beers in the marketplace if they can,” he said. “But this may put a damper on some of that innovation and experimentation for some of those hoppier beers, which is a shame.”

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