Paying more for a pint is something no beer fan ever wants to see happen, but unfortunately a specific set of global circumstances might just see this happen for British drinkers in 2018.
The essential basis of most mass-produced beers is barley, and this crop was recently hit hard by Europe’s 2018 summer heatwave. By some estimates, such as that of Wall Street investment researcher Bernstein, European barley prices have gone up by 20-30% on average this year already. With global barley stocks at their lowest level since 1984, there doesn’t seem to be much hope that this trend will ease up.
But that’s not the only core production element that is getting pricier for multinational brewers. Prices of aluminium have been on the rise this year, after President Trump urged through US sanctions against the world’s biggest producer of the lightweight metal.
Rusal, controlled by oligarch and Putin associate Oleg Deripaska, has been effectively shut out of the US financial system. This makes it extremely difficult for Western companies and governments to make deals with the Russian business, who produce roughly 9% of the global aluminium output.
It is estimated that 430,000 tonnes of aluminium are sitting in Rusal warehouses, with no buyers on the horizon. Alcoa, the biggest US metal producer, now believes 2018 may see up to a 1.1 million tonne supply shortfall compared to the yearly demand.
This of course puts giant beer producers and distributors in a double bind, with costs increasing on two sides of the market. With aluminium prices rising as high as $2,700 a tonne on the London Metal Exchange, Bernstein experts predict that European brewers might see production costs rise by as much as 15% by then end of 2018.
Some brewers may have seen this coming, however. Ab-InBev and Molson Coors, two of the world’s biggest alcoholic beverage producers, both committed to higher-than-inflation prices for UK consumers already this year. These measures, which have not come into effect just yet, might see British wholesalers pay nearly 4% more on many beers and ciders than they did in 2017.
‘Increases in the cost of packaging materials, utilities and raw ingredients have meant it is necessary to increase our prices’ a Molson Coors spokesman said in January.
However, it isn’t all doom and gloom for UK consumers. The British Isles are actually net exporters of malting barley – so should stocks become too scarce, options still look good for British consumers. Companies can either continue to export for increased profits or lock down and help UK brewers become self-sufficient.
Either way, it seems a certain degree of beer price rises are inevitable and will be something UK drinkers will just have to stomach over the coming few years.