Barley price increase affects premium beer

The premium beer market has been the strongest growing Australian beer market segment in recent years, showing a growth of 15% annually since 2001. The plethora of specialty, craft, boutique beers and micro labels that have entered the domestic market stand testimony to that trend and have certainly added to booming figures and broadened the variety available to our more discerning drinkers.

However, Barley prices have sat at a raised level ever since the poor yields of the past year’s crops pushed prices up, (now at A$500/mt from around the A$300/mt during better yields) forcing breweries to dig considerably deeper for their beer-essential ingredient.

As the world’s second largest barley exporter, the country’s overseas demands (largely China’s brewing industry) have pushed the prices up for our breweries, leaving growers and brewers alike hoping for a much better yield for the 2008 crop. Approximately 40% of Barley grown in Australia is committed for the brewing sector, while overseas demands usually have us export 80% of our production. And due to the poor crops, further price increases are expected by about A$5/mt month.

“The growing demand for boutique and craft beers has sure shown its impact on our need for malting barley production” said boutique label Snowy Mountains Brewery’s director Kevin O’Neill, who last week collected a Silver Medal for his Crackenback Pale Ale at the Australian International Beer Awards.

”The increases on barley prices have translated into higher production costs for breweries — affecting the small and micro labels more heavily than the bigger ones. We use all grain barley in our beer, as do most micro breweries. Some of the global manufacturers substitute it for corn, cane sugar and rice.”

Although not necessarily reflected in retail prices at this stage, the strong growth of the Australian premium and boutique beer market shows that drinkers are a lot more discerning these days and don’t mind spending the extra dollar or two to drink a uniquely flavoured boutique beer rather than the mass produced variety.

“Australian beer consumption is now the lowest since 1960 giving further proof to the trend from ale drinkers to choose quality over quantity” said O’Neill.

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