Could Barley Costs Drive Up Beer Prices?

Analysts believe higher bushel costs will fuel price increases.

Brewers are grappling with higher energy costs. They’re dealing with higher aluminum costs.

Now the cost of barley, a grain that’s a key ingredient in beer, is going up even as production falls.

According to this Associated Press story, a bushel of barley cost $3.19 in December -- up 24 percent from the year-earlier period. Meanwhile, production has fallen by 15 percent.

The AP story cites two analysts who believe the rising cost of barley, on top of other rising input costs, will drive up prices.

"Raw material costs have gone up so much in such a short period of time, it's unavoidable that you will see some price increases eventually," said Morningstar analyst Matthew Reilly.

Robert van Brugge, an analyst for Bernstein Research, told the AP that barley price increases could drive up costs of goods sold by 1 percent to 2 percent.

The story notes that Anheuser-Busch already is planning to raise prices this year and Mexican brewer Femsa has an increase in the works.

Beer Marketer's Insights Express also has a story.