*Gulp* -- Are Beer Prices About to Go Up?

Published: Thursday, 12 Aug 2010 8:17 AM ET
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By: Cindy Perman CNBC.com Writer


A little bit of an alarming headline out of the UK this week: “Beer prices to surge.”

The price of a pint is about to jump to 4 pounds (US$6.30) there due to poor harvests in Europe and the Russian wheat crisis, the London Telegraph reported.

So, *gulp* — what does this mean for beer in America?

First, you’ll be relieved to know that most of the hops and barley used in the U.S. comes from North America. So, unless European brewers start ordering from the U.S., the issues over there shouldn’t have much of an impact on prices in the U.S.

Now the bad news — U.S. beer prices are up 2 percent year to date, according to the US Bureau of Labor Statistics. And Harry Schuhmacher, publisher of the Beer Business Daily, said they’re going to go up again in September.

That’s due to two reasons: 1) Inflation in consumer beer prices (CBI) has lagged the increase in producer beer prices (PBI) in the past few years, and 2) Consolidation.

“[N]ow, brewers in the U.S. are much more consolidated and are putting profits over market-share gains,” Schuhmacher said.
In fact, the two largest brewers, AB InBev and MillerCoors already have price increases planned for the U.S., he said.

But Chris Ericson, owner and brewmaster of the Lake Placid Pub & Brewery, said it won’t be a steep increase.

“I think what we’ll see is a little bit more of a creep up in U.S. beer prices,” Ericson said. "I don’t see any dramatic spike.”

Still, both he and Schumacher agree that it’s a pretty good time to be a beer drinker.
“I think it’s an unbelievable time to be a U.S. beer drinker,” Ericson said. “You’ve got a lot of good choices — and a great value,” he said.

In the words of Homer Simpson: Mmmm … Beer.

Clarification: The two percent rise in beer prices this year is according to the Bureau of Labor Statistics. An earlier version of this story cited the source as the Beer Institute.