The cost of beer-flation

The hell with the rising price of gasoline; here's the real news: Beer prices are steadily climbing.

The U.S. Department of Labor reports retail beer prices are up 3 percent over May 2007 prices.

Blame rising costs: Grain is up for myriad reasons, including low-volume crop years and competition from biofuels. Shipping costs are up, as is packaging.

It is unlikely, however, the higher prices will lead to a significant drop in sales, at least for now.

"It's kind of like gas: You walk up and see the price, and you buy it because you have to," said Adam Joseph, a 34-year-old Tampa lawyer and the founder of the Tampa Beer Meetup, a group that gathers at various local bars once a week to sample different beers. Joseph said rising beer prices would not prevent him from drinking beer, but if they rise too much he might not go out as often.

I met with Joseph recently as his group sampled beers at The Dubliner Irish Pub in the SoHo area of South Tampa. While costlier beer is not a welcome thing, the consensus among beer aficionados is that the beer must keep flowing.

John Zimmerman, a 43-year-old corporate trainer, agreed. He said that since the group mostly consists of professionals who typically only drink a few beers at their meetings a slight increase would have little effect. That could change, however, if the price of a glass of beer increased like the price of gasoline has the last few years; for example, from around $4 to $7.

"That's just crazy, $7 for a beer," Zimmermann said.

Jeff Smith, a 26-year-old software engineer and University of South Florida doctorate student, said that as a homebrewer, he is feeling the pinch of the price increase. The cost to brew a 5-gallon batch has gone from around $30 to around $45 in the past year. Not only has the price of grains to make beer increased, the store that sells the supplies has actually begun to ration bags of hops, the cone-shaped flower of the female hop plant that gives beer its aroma and flavor.

"They used to have it right out in the open," he said. "Now they're in the cooler."

Smith said if the cost of supplies doesn't drop soon, he is going to have to learn how to grow his own hops.

Microbrewers have the same problem as the homebrewers.

Small craft brewers produce smaller batches than large commercial brewers and aren't able to negotiate lower prices for grains and hops that the large commercial brewers enjoy. As a result, costs for microbrewers have shot up in recent months.

"It's kind of like the price of gas: The increase starts slow and then goes up more and more," said Dave Doble, the head brewer at the Tampa Bay Brewing Company in Ybor City.

Doble said he has seen a "huge increase" in the price of ingredients he uses to make his beer: a 300 percent to 500 percent increase for hops, and around a 100 percent increase for grains since early 2008. While these increases far outpace inflation, Doble said so far he hasn't had to raise prices too much for his customers.

"We don't want to price ourselves out of the marketplace," Doble said. "I haven't noticed much change in business, but profits are down due to the increase in price."

Doble said hops and grain prices are beginning to level off, although he doesn't think they will go down anytime soon.

With the cost of everything else rising as well, some of us have been able to just grin and bear it, taking solace in our beer. But with beer prices going up too, we may be in some real trouble.

So maybe it's time for the White House to step in. How about an alcoholic stimulus package, Mr. Bush?

Just send a one-time check to all Americans aged 21 or over. Or, if that's too drastic, authorize a temporary suspension of alcohol taxes. Measures like these would hedge against price increases at retail stores and bars. Beer producers and retailers could raise prices as needed and avoid having to choose between lower profits or passing the higher cost onto the beleaguered consumer.

This type of targeted stimulus would keep the beer market, as well as the cheery dispositions of millions of beer-quaffing Americans, functioning during these tough economic times.

It might even help Bush raise his approval ratings.