Poor harvests have pushed up the price of malting barley again, putting brewers - already battling VAT and duty rises - under yet more pressure.
The price of malting barley is up 16% year-on-year [Mintec] as UK availability tightened by 5% on last year’s levels due to a poor UK and Scandinavian crop. The price of malting barley has risen by 136% in the past two years.
Molson Coors, whose Carling lager is made from 100% British barley, warned availability could be strained further as many growers took a lower-risk strategy and chose to grow feed wheat and feed barley rather than exposing themselves to the high price volatility that malting barley dictated. However, the company’s Growers Group ensured its own supply.
Scottish microbrewer Brewdog, which sources all its malt from the UK, said it was paying a higher price partly offset by economies of scale as it grows.
While many brewers buy barley in advance, it is yet another pressure for a category already struggling with soaring barley and other commodity cost rises, tax hikes and weakened sterling. In October, AB InBev announced that added costs had forced it to pass on a 7.8% price increase across its UK portfolio from 2 January.
Although malting barley prices were back to highs of 2007, a British Beer & Pub Association spokesman said: “Raw materials are anywhere between 3% and 10% of the price of beer - significant, but not when compared with other costs like beer tax.”