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Friday Night Beer Blog - the Beer Economy [1]
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Date: 2022-09-16
Happy Friday beer fans, come in and have a cold one with us!
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The world’s economy has been under unusual stress for 2-½ years now, from first the Covid pandemic and now the war in Ukraine. We’re seeing higher prices for almost everything, including beer, and for reasons you might not have thought of. Here are some poorly organized notes on things I’ve read lately.
- Not enough CO2? Too much carbon dioxide in the atmosphere might be Earth’s biggest problem, but there isn’t enough of it for pressurizing beer. Fermentation produces CO2 naturally but most smaller breweries haven’t invested in the equipment to capture and use it, so they have to buy CO2 to carbonate the beer and to move it around the brewery under pressure. Industrial CO2 is a byproduct of the production of other industrial chemicals, so if there's less demand for those chemicals there’s less supply of CO2. Also demand for CO2 is up because of Covid — some of the vaccines need to be kept on dry ice for transporting.
- Not enough bottles? Covid lockdowns moved beer sales from on-tap in bars and restaurants to package sales in stores, most dramatically in Europe where on-premise sales were a much larger fraction than in the US. Belgian (and probably other) brewers are now having trouble getting enough bottles. The price of glass is up because the price of energy is up and glass-making uses lots of heat, and because of the war they can’t buy bottles from Russia anymore. And it seems Belgian brewers still have attitudes about canned beer that most Americans have gotten over.
- Malt too? Russia and Ukraine are two of the world’s four largest barley producers. Neither is likely to be exporting as much this year as previously.
- It’s worse in Britain — The fighting in Ukraine and resulting sanctions against Russia have sent energy prices up worldwide and all of Europe will be hurting, but the UK is hurting worse. Every kind of business will be having trouble and pubs are seeing it coming already.
Like thousands of pubs across Britain, the Red Lion and Sun fears financial ruin this winter as its energy costs surge, just as business was starting to recover from the fallow years of the COVID-19 pandemic. Nestled in a leafy north London suburb, the pub's annual energy bill is on course to more than quadruple this year to 65,000 pounds ($76,000) from 16,000 pounds, said James Cuthbertson, a director of The Frisco Group, which manages the pub along with two others in the capital and southeast England. "We need to come up with an extra 50,000 pounds in profits each year, at the same time that profits are coming to a standstill as consumers see their own prices rise at home," he said.
Quadruple?
Annual consumer price inflation for gas and electricity in the United Kingdom is forecast to soar to an average of around 80% this year, compared to an average of 40% across the 19 countries that use the euro, analysis from Deutsche Bank shows... Unlike other problems in the UK economy, Brexit doesn't appear to be a major factor. So why are British energy bills rising so much faster than across much of Europe? A broken market As wholesale costs ballooned last year, 31 smaller UK energy companies — who traditionally offered competitive prices — went bust, forcing millions of customers onto the books of bigger suppliers, and to pay higher bills. The way the British government designed the energy market made this more likely, Henning Gloystein, director of energy, climate and resources at Eurasia Group, told CNN Business. Smaller companies were acting like brokers rather than providers of an essential utility. "Many UK retail energy providers weren't real energy producers. Instead, they bought electricity and gas in the wholesale market and then sold it on to retail customers like households," Gloystein said.
Who remembers the disaster in Texas a couple winters ago? People paid crazy bills, and people died, because the conservative government designed the electricity market to benefit suppliers not consumers.
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OK this is late already, gotta go. I’m drinking a Hazy Little Thing. What are you drinking? Who’s brewing?
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[1] Url:
https://www.dailykos.com/stories/2022/9/16/2123395/-Friday-Night-Beer-Blog-the-Beer-Economy
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