Bitter one to swallow: Cost of beer production soars 62% in two years spelling ‘drinkflation’ ahead

• eToro’s Beer Index looks at spot prices of the raw materials required by beer producers – from barley and malt, to aluminum and gasoline for packaging and transportation.
• Gasoline costs have seen the biggest increase in two years, climbing 138%, whilst barley and malt prices jumped 104% and 87% respectively, due to the war in Ukraine.
• Rice is the only commodity to have fallen in price, dropping 1%, thanks to production outstripping demand every year for the last 15 years, leading to large stockpiles.
• 62% increase in the price of beer production dramatically outpaces the 12% rise in UK CPI since July 2020, indicating there is more price pain to come for beer drinkers.

1 September 2022: The cost of the commodities required for the production, packaging and transportation of beer has risen by 62% in the past two years, according to the first ever Beer Index from social investing platform eToro. 

The rate of price growth dramatically outpaces the 12% rise in the UK consumer price index (CPI) over the same period, indicating there is likely to be some price pain to come for beer drinkers as brewers look for ways to offset their costs.

eToro’s ‘Beer Index’ (simple weighted index) is based on current spot prices of a basket of six commodities needed for producing and selling beer – wheat, barley, rice, malt, aluminum (for cans) and gasoline (for transportation and farming). Since August 20th 2020, the Beer Index has risen by 62%, with the war in Ukraine playing a significant role in the costs brewers are currently facing. 

Ben Laidler, Global Market Analyst at eToro, said: “The average price of a pint has risen by 8% over the past two years to £4.09, four percentage points behind the broader consumer inflation rise. But our Beer Index tells us that stronger price pressures are brewing and stiffer price rises could lie ahead. “This could be unfortunate timing with the Oktoberfest starting in a couple of weeks and the football World Cup kicking off in November. One winner will be the tax man, with VAT and beer duty making up around a third of the cost of a pint, and overall alcohol sales pulling in an estimated £450 of tax per household.”*

Gasoline – required for farming the ingredients of beer as well as for the transportation of the product – has seen the biggest price rise of any item in the beer basket, with its cost jumping 138%, largely thanks to the war in Ukraine and the restricted supply of crude oil coming from Russia.

Barley and malt costs have also skyrocketed, rising 104% and 87% respectively in the same period, also largely thanks to disruption caused by the war, with Russia and Ukraine thought to supply as much as 30% of the world’s barley exports.

Rice is the only commodity in the Beer Index to have dropped in price in the past two years, falling by 1% since mid-August 2020. The stable price of the crop – which is used as adjunct in combination with barley malt to lighten beer – is thought to be down to supply outstripping demand every year since 2007, leading to large stockpiles.

Spot prices taken on the third Thursday of August each year. Equal-weighted across the six commodities.

**ENDS**

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About the data

Data sourced from Refinitiv. Aluminum (99.7% LME Cash, US$/MT), Barley (MPLS Terminal prices, US$/Bushel), Gasoline (Regular Unleaded, FOB NYH, US$/Gallon), Malt (2RS Average EU FOB Antwerp Crop, EUR/MT), Rice (Processed, US$/50KG), Wheat (No.2 Soft Red, US$/Bushel). 

The full data is available upon request

For reference – here is the price of each commodity on the third week in August for the previous five years:

All measured in USD per standard unit of measurement for the particular commodity

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