Beer Prices Set To Increase?
Beer Prices Set To Increase Due to Gas, Theft and Exhange Rates.
Three things are happening within the beer industry that may cause you to pay more for beer in the future. First is the growing trend (no pun intended) of American farmers to switch from growing barley (a key ingredient in beer) to corn for ethanol production (used as an alcohol-based substitute for gasoline). Secondly, the problem of vanishing beer kegs is making beer brewers worry and hittting their bottom line. Lastly, is the weak dollar is raising the cost European beer imports.
The price of barley in Germany is at an all time high as more and more farms have switched to growing corn. Beer brewers already have either raised prices or have warned that beer prices will soon rise as a result of this shortage. This trend is also seen in the USA where demand for ethanol is skyrocketing and corn is proving to be a more profitable crop than barley. If this continues, expect brewers in the USA to increase prices just like their German counterparts.
High prices being paid for scrap metal has triggered a rash of beer kegs being recycled. Beer breweries expect to lose hundreds of thousands of kegs and millions of dollars this year as kegs are stolen and sold for scrap. The beer industry is calling on the scrap metal recyclers to stop accepting beer kegs from anyone but breweries. The cost to replace a keg is about $130 and the beer industry reports that of the 10.7 million kegs in circulation, about 300,000 a year are lost.
The Bush administration has allowed the dollar to weaken since taking office. As a result, the US Dollar is currently trading at a 12 year low against the Euro. This means that fans of European beer will have to pay more of their favorite Belgian Ale, German lager or Czech pilsner. "The dollar is under pressure, that's the story. Spreads are moving against the dollar and it's only a matter of time before we hit $1.40 in euro/dollar and $2.06 in (sterling/dollar)," said Martin McMahon, FX strategist at Credit Suisse in Zurich. Expect European beer prices increase as the dollar continues to weaken.
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