Beer and spirits price tipped to rise after low grain harvests
Beer, whisky and gin could become more expensive due to the heatwave that has ravaged Europe over the past couple of months.
Grain traders are anticipating a 30% fall in this year’s UK barley crop and most neighbouring countries are in a similar position.
Jonathan Arnold, director of barley and oats at grain trader Robin Appel, said it would “undoubtedly” cause a spike in the price of beer and spirits that are reliant on grain for production.
“The price of grain has shot up dramatically over the past four weeks because the heatwave has hit crops all over the world,” he said. “It’s already around £40-£50 a tonne more expensive than it was this time last year.
“I wouldn’t be able to say how much prices of alcohol will go up by, but they undoubtedly will.
“Of course, the price of raw materials is only a fraction of the cost of a pint. Duty and taxes make up most of the cost so it’s not all down to the price of barley. Those costs will be decided by the brewers.”
Crops were planted much later than usual this year as the Beast from the East lingered throughout the spring.
Growers are also harvesting early due to the heatwave, and the weather has taken a heavy toll on major grain crops such as barley and wheat.
Stratégie Grains, a cereal market analysis firm, reduced its EU harvest estimate to less than 130 million tonnes, citing extreme weather in what would be a six-year low in production.
France is one of the heaviest hit countries, with estimates showing it would lose 20% of its grain harvest, followed by Italy and the UK losing 13% and 12% respectively.
Crops are still being harvested and the full impact will not be revealed for another month, but growers across Scandinavia also reported significant declines.
The beer industry is already grappling with the headache caused by a lack of CO2, and several suppliers have reported a resulting dent in their sales.
It could become a “longer-term” problem as “fragile” supply arrangements struggle to cope in outages, according to City analyst firm Liberum.
“Outside of the ammonia industry there are two possible sources of long-term merchant CO2 but at this stage no obvious prospect of a major source in Europe,” Liberum said. “While this year’s supply problems will ease as ammonia plant maintenance shutdowns come to an end, the source of the problem is unlikely to be resolved quickly.”