Monday, October 08, 2007

What happens when input prices rise: Suds edition 

I can hear the Elder crying. The WSJ tells us that increases in grain prices are causing an increase in the price of beer.

Craft beer makers have faced escalating costs over the past year. Prices for malting barley, which accounts for a beer's color and sweetness, have jumped as farmers increasingly shifted to planting corn, which has been bringing higher prices because of high demand from makers of biofuels, like ethanol. The weak dollar also has made it more expensive for U.S. brewers to buy commodities from Europe.

The news worsened for craft brewers significantly in recent weeks. Firms that turn barley into brewing malt informed craft brewers of price increases ranging from 40% to 80%, and hops suppliers announced increases ranging from 20% to 100%, depending on the variety of hops.

I am thinking of trading my Touareg in and was looking at flexible fuel vehicles. I now see I would just be shooting myself in the six-pack and burrito.

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