Friday, September 11, 2009

Hop Shortage Update

In 2007 the worldwide hop shortage loomed as a potential disaster for breweries. Fortunately, those crafty craft brewers seemed to have weathered the shortage with aplomb. And now some good news: 2009 was apparently a bumper year for worldwide hop production. Why? Good weather and increased acreage that is a result of the recent high hop prices (hooray for markets!).

Expensive hops are partly to blame for increased beer prices. With a bumper crop, hops prices should return to something close to pre panic levels suggesting that we should see beer prices come down as well. However, economists have found that in many markets producers are quick to increase price when costs increase but slow to decrease prices when costs come back down - the classic example being retail gasoline and crude oil prices.

So, brewers, distributors and retailers: how are you going to respond?

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