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Beer: Defying the Laws of Supply and Demand

kegstand-at-work.jpgIf you did a little happy dance when you learned that beer can actually be good for you, you may want to sit down before reading the rest of this post. Foreign Policy's Passport blog reports that beer "defies the laws of supply and demand." The post discusses how the worldwide shortage of hops and malt has left the beer industry with no choice but to jack up prices:

For beer drinkers, it means only one thing: bigger tabs at the bar. Well, for some beer drinkers anyway. Mega-brewers such as Anhueser-Busch negotiate their hop contracts years in advance and will be unaffected by the shortage. But smaller, so-called "craft" breweries aren't so lucky. A variety of hops known as Cascade, for instance, the most popular among craft brewers, has more than tripled in price in the last two months, jumping from $4.10 per pound to around $12.35 per pound. Boston Beer, which brews Samuel Adams, says it will raise its prices by 5 percent as a result of increased costs. Other mid-sized and small brewers are almost certain to follow suit.
The irony is that, even as the supply of hops and malt are severely low, demand is at an all-time high, at least in the United States. Craft beers now make up 17 percent of the U.S. market and retailers depend upon them to boost profits. Are the commodities markets drunk?
Perhaps the demand for beer is at an all-time high because consumers are stressed about the outrageous price of oil. The question is: will people try to become "less dependent on" beer as they do when oil prices increase?

(Kegstand at Work image courtesy of star5112, cc 2.0)

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