Wine retailers are only too aware of the impact of Brexit, the pandemic and global shipping issues on wine prices. Those who sell beer as well are almost certainly going to see wholesale prices in that category increase too in the coming weeks and months.
A shortage of EU workers to pick hops is expected to cause problems for the 2022 British harvest. Pressure is also being felt by farmers from rising energy prices and the general impact on wage costs of inflation, which at the time of writing had just passed the 9% mark.
A study by farming consultant Anderson Midlands for the British Hop Association forecasts a minimum increase of 15% in wage costs, a doubling in outlay on fuel – primarily for hop drying – and significant increases on other inputs, including fertiliser, spray chemicals and even the string to trail the hop bines.
That all translates into an increase in the cost of production of £1.11 per kilo between the 2021 and 2022 harvests.
“I have never seen anything like these cost increases in a lifetime of growing hops,” says Mark Andrews, chairman of Wealden Hops in Kent.
This year’s problems come on top of the pandemic, the effects of which hop growers are still recovering from. When pubs closed for 10 months, some growers were asked to supply only half their annual crop despite having legally-binding contracts for their whole acreage, resulting in losses and debts for many.
The study says that this year’s cost increases should translate into an average farm gate price of £11.91 per kilo for British hops. The BHA points out that this still compares favourably with the £20-£30 routinely paid for imported hops, particularly from the US, which have becoming de rigeur for brewers searching for fruitier flavour profiles over unbridled old-fashioned bitterness.
It says it is “reaching out” to brewers and others in the supply chain to ensure this theoretical price increase becomes a reality.
But for brewers, retailers and drinkers, the problems don’t stop there. The other main solid ingredient, barley, is becoming a scarcer commodity globally because of the war in Ukraine and a drought last summer in the main growing regions of the US. Global market prices have risen by more than 30% in a year.
The inevitable outcome of all this is that shelf and tap prices of beer will rise. Adnams says that production costs of its beers could increase by between 25% and 30% this year, at least some of which will have to be passed down the line to retailers and consumers.
Most people tend to be OK with price rises when they know there’s a good reason, so it’s worth being in possession of the facts.
A pal recently posted a picture of a jokey A-board outside a pub that said: “Beer is now cheaper than fuel. Drink, don’t drive.” It induces an instinctive chuckle given the furore about pump prices recently. But the facts don’t support the sentiment. Even when a litre of unleaded pushed towards £2 a litre, beer at £4 or £5 a pint in a pub – roughly £8-£10 per litre – was already way more expensive. And as production costs spiral, the A-board author’s wishful thinking isn’t going to become reality anytime soon.