Craft beer has never been about “drinking cheap”. We have always been willing to pay a little bit more for a product that tastes better. We’ll spend on one that’s made in our neighborhood, and especially that provides a community. Big beer will never be able to replicate that. How does that change as we head into 2022, though?

I don’t need to tell you that prices all around us are going up. Consumers are being squeezed on all sides, and you’d be crazy to think that beer isn’t going to be getting more expensive too. While the Fed is going to be putting forth a lot of effort in 2022 to slow down inflation, that doesn’t even begin to solve the problems that face the price of the six-pack on your store shelf.

We’ve been hearing about this for a while, right? And yet, we consumers really haven’t seen it happen on the shelf at our local beer store, yet. If prices are actually going to be going up here in Cincinnati – how much? And why? What’s the real story and how does it relate to us here.

To start, we should talk about ingredients.

When Costs Go Up…

There is no way around the fact that things are costing more. You’re certainly seeing it in the grocery store – at the gas pump, etc. Things are more expensive all around. Why would you think that it’s at all different from your local brewery?

The biggest ingredient (besides water) in beer is malt. Barley malt as a whole has increased month over month – over and over. In addition to a bad crop last year, the industry is being hit with the same supply chain issues that you’re noticing when your Amazon packages aren’t getting to you when they’re supposed to. When something costs more to produce you have to raise your prices.

I reached out to Bret over at Urban Artifact to get his input on this. Urban specifically is no stranger to costs that can vary wildly year after year. The brewery uses all real fruit in their beers – and a ton of it, too. The brewery has made a commitment to not only use only the real stuff – but they use the good stuff. That means that sometimes it’s stupid expensive and sometimes they can’t even get the specific ingredients that they are planning on using.

And that’s when things are normal.

What does it mean when things get bad?

When Urban needs to, they can shift. They might not make one of their beers like Operation Plowshare because the Blackberries that they use in that and their Gadget aren’t plentiful enough. Instead, they might make a Pink Guava Midwest Fruit Tart – without sacrificing by using concentrates or cutting corners on their product. They have become fluid and flexible to keep changing as their ingredients change.

That isn’t a luxury that breweries (including Urban) can have when it’s malt prices that we’re talking about – you can’t just substitute rice and call it a day… right, Budweiser? When the price of something that isn’t changeable goes up, you’re forced to make choices. You can sacrifice quality – use inferior ingredients – or you can raise the price of the product you’re creating.

And then… we also have to talk about cans.

The Aluminum Chaos

I’ve talked to several different spots about this – folks at MadTree, at Braxton… they’re all closely watching what this means and trying to figure out how to deal with it. It’s an aluminum armageddon out there.

You’ve seen articles from Forbes, Food and Wine, and more letting you know that things have just hit the fan in a big way.

There was a notice that went out from Ball Corporation (one of the few, and the largest can manufacturer in the United States) to hundreds of breweries across the country. Things are changing, and quickly. While last year, the company was optimistic that they’d be able to start to meet demand with increased production and new facilities, this latest letter was not quite as sunshine and rainbows.

Keep in mind that we used to hear complaints from smaller breweries that ordering printed cans meant that they’d have to put in an order for an entire truckload – which is around 200,000 cans – and a lot more than the little guys would need. Ball’s notice lets breweries know that the minimum is going up fivefold starting January 1st. No longer can you buy one truckload, you have to order more than a million cans to even get them printed. That doesn’t just take it out of reach for the little guys. That takes it out of reach for almost everyone.

Why?

These restrictions are a response to the demand for aluminum that has only grown through the last couple of years. Cans became a lifeline for breweries as they saw their taprooms shut down, and their customers drinking from home. For a lot of folks, their taprooms wouldn’t return in the same way as before. When you put that increased demand right next to the proliferation of seltzer brands that are almost always served in cans – and the move by breweries all across the country to adopt canning instead of bottling – the industry just hasn’t been able to keep up.

Ball goes in in their letter that not only will they not allow smaller orders, they also will stop being able to warehouse anything for breweries. It means you’ll need to find your own warehouse space for the cans (assuming you’re able to order them). Warehouse space if you can’t put it together – also costs money.

The next solution for a lot of breweries is going to be shrink-wrapped cans. Ball does have four distributors that will allow smaller orders that they will shrink wrap – and I’m sure you’re getting used to seeing these cans out and about. The problem with these isn’t just that they aren’t recyclable anymore – it’s also that it raises the price about 30% from what breweries currently using printed cans are paying.

No matter how you look at this problem – it’s going to hit just about everyone.

The Takeaway

There is certainly going to be a change. You will see prices go up next year. Some of the folks that I’ve talked to have predicted anywhere from $1-$3 per six-pack of beer. It’s going to be a little harder for those guys in the big middle ground of craft beer to find the margin that they are currently used to with their product.

I don’t want it to seem like I’m preaching doom and gloom with all of this. Our breweries will survive. This is not some sort of sign of a fictional craft beer bubble bursting or something silly like that. I have full faith in that. It will change things, though. Craft Beer has always been a premium product, but in recent years we’ve seen more and more the rise of premium products within craft beer. That’s only going to keep increasing. With beer’s market share dipping, we’re going to see the folks that are still drinking beer drinking more and more premium sides of it.

I think that’s ok. I might drink less beer in 2022 as I did back in 2012 – but I’m going to be drinking better products and spending more money to do it… and I’m going to be doing it locally more than ever before.

As pricing does start to change, it raises one big question for me… who’s gonna pull the trigger first? Who’s going to be the brewery that will have to start talking to their customers and laying the groundwork? There are a lot of folks that will not understand why their go-to six-pack is more expensive today than it was two years ago. Communication from the brewer to the drinker hasn’t gotten easier or better in the last few years. When things like this happen – it certainly becomes even more important.