E-Malt.com News article: Canada: Beer price increases predicted for 2012

Brewers may get a reprieve this year from tight supplies of malting barley in top exporter Canada, but higher costs will likely to force them to raise the price of beer next year, Reuters communicated March, 7.

Flooding lowered the quality of the latest barley crops in Canada and Australia, leaving some unsuitable to turn into malt.

And by July, maltsters dependent on Canadian supplies will be "running on fumes" ahead of the harvest in autumn when the price of malting barley will jump by one-third, an official with the Canadian Wheat Board said.

"The tightness isn't just in Canada, it's everywhere," said Lorelle Selinger, manager of barley marketing and sales at the Wheat Board, which has seen its malting barley exports fall by half this crop year, which ends July 31.

Tight barley supplies are one example of how weather-caused crop disasters last year in Russia, Canada and Australia have pushed grain and oilseed prices to 2-1/2-year highs.

Many North American maltsters and brewers have a 2011 cost buffer because of forward pricing contracts with the Wheat Board, the monopoly seller of Western Canada's malting barley.

Barley is the second-biggest cost, after labour, for some brewers.

Molson Coors, one of Canada's two biggest breweries, is largely safe from barley price shock this year, said company spokesman Adam Moffat.

But barley prices are unlikely to ease soon, leaving the cost of next year's pint in question, other brewers say.

"(Crop) prices will stay very high probably much of 2012," said Michael Micovcin, Chief Executive of Saskatchewan-based regional brewer Great Western Brewing. "Ultimately, it will be passed on to the consumer, no question."

Beer price increases may happen in the second half of this year, but are more likely starting in 2012, said Dwayne Dubois, chief financial officer at Alberta's Big Rock Brewery.

"Drink up now, is my advice."

Brian Sawatzky, director of grain at Canada Malting Company, the country's biggest maltster owned by Australia's GrainCorp, said maltsters with lots of storage can sometimes ride out high prices, although stocks will be tight.

"Everybody really shoulders risk," he said.


09 March, 2011