Frozen barley crops to push craft beer prices higher in N. America

Mon Sep 22, 2014 3:39pm EDT
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By Rod Nickel

WINNIPEG Manitoba (Reuters) - Beer prices in North America may rise next year as brewers and maltsters face higher costs after cold, wet weather damaged Canadian barley crops and left farmers and tipplers crying in their beer.

Canada, the world's second-biggest exporter of malting barley, was already harvesting its smallest crop since 1968, before a recent dump of snow and freezing temperatures in Alberta, the biggest barley-growing province.

The shortage will hit craft brewers the hardest, since they typically keep less malt inventory on hand than larger breweries that are also better able to absorb costs.

"Prices (going) up means our costs go up and beer prices ultimately go up," said Neil Herbst, co-owner of Edmonton-based Alley Kat Brewery. "Any small brewery is going to be exposed."

With supplies tight, the premium maltsters pay for high-quality malting barley has grown and that cost will pass along to brewers who are not protected by long-term supply contracts.

Craft brewers, the small breweries that are independently owned, typically have shorter-term supply contracts than big brewers to buy malt, which is a product made from germinating and drying cereal grains.

(Graphic on Canada barley production, beer prices:

Brick Brewing Co Ltd, an Ontario-based company, has an assured supply of malt at a fixed price through the end of 2014 with Canada Malting, a unit of Australia's Graincorp Ltd. But starting in 2015, Brick, whose brands include Waterloo and Laker beers, expects to pay more for malt, reflecting the poor barley crop.   Continued...

Cans of Molson beer are seen on a production line during a news conference in Montreal in this file photo taken March 19, 2012.  REUTERS/Christinne Muschi/Files