Supply, Demand, and a Polite Belch
The WSJ has a disturbing report today. Beer prices are at risk of going up. Well, really hop prices, but it’s going to lead to a rise in beer prices. I won’t panic, well, not much.
The article is currently locked online, so I won’t quote heavily here. But I’m obviously not shocked. I live in an area of about 200,000 people, and the hop fest last weekend had 18 breweries of various sizes pouring beer. We affectionately call our area, “beervana.” While that skews my take on the market, I do see that it’s nearly impossible to go anywhere these days and not find a local brew in the stores. Even if the sizes are small, the mass of new brewers is pushing the limits of supply and demand for hops and grains, and this is likely to raise prices on both component and final price.
This is probably a good thing, at some level. It’s going to push the industry to look for new, and better, supply options over time, and it’s all being done without government regulation of components. At least for now. While BATFE definitely crawls all over the back side of the beer and alcohol process, it has not done a lot of stomping on the actual creation side, other than some definition work.
But it will push prices up in the short and likely long term. I’ve been taken aback by the recent increase in prices for both craft and regular beers, and this is likely to only push up farther. Oddly enough, it’s pushed me to go more often for an inexpensive wine for the evening over a nice beer, and that might server to push prices in different directions over time.
And all of this is happening because people make choices based on their wallets, both in the end consumption, and also in the creation of products. I think that’s awesome.
So when the congressional hearings start, don’t expect me to be happy…