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<< Previous   of   Next >> Dan Bates / The Herald  (click to enlarge) Scuttlebutt Brewing Co. owner Phil Bannan Sr. (left) assists head brewer Matt Stromberg in brewing and bottling Thursday at the company's new brew facilities on Cedar Street in Everett. The company has been storing grain to help offset the rising cost of barley, Bannan says. (click to enlarge) Scuttlebutt Brewing Co. owner Phil Bannan Sr. holds a sample of barley in the palm of his hand. The grain is a primary ingredient in beer. Dan Bates / The Herald  (click to enlarge) Scuttlebutt Brewing Co. owner Phil Bannan Sr. leans against stockpiled barley at the company's new Everett brew facilities.   ADVERTISEMENT   Related Stories • Anheuser-Busch bets price hikes won't deter drinkers 11/29/07 • Spend it if you've got it 11/2/07   CONTACT THE HERALD Robert Frank, City Editor frank@heraldnet.com   Published: Friday, November 2, 2007 Price of beer is one thing that isn't going flat Local brewers say the cost of ingredients is rising dramatically. By Bill Sheets, Herald Writer EVERETT -- Microbrew drinkers, lift your glasses today and drink a toast to the prices you've been paying for those beers. Soon, those prices are likely to go up. The cost of barley, hops and wheat are all rising faster than those little bubbles in your lager, and brewers in Snohomish County expect to have to pass that cost on to you. "A rough guess is probably a dollar a six pack," said Phil Bannan Sr., co-owner of Scuttlebutt Brewery in Everett. Scuttlebutt's price increase, planned to take effect in January, also would raise the price of a retail pint about a quarter, Bannan said. The number of farmers growing barley and hops, two of the main ingredients in beer, has been on the decline for up to 20 years because of low profitability, said Greg Friberg, president of Great Western Malting Co. in Vancouver, Wash., which sells barley malt to many small brewers around the Northwest. More recently, Midwestern farmers, drawn by the alternative fuels market, have been replacing grain crops with corn and soy. A three-year drought in Australia has hit the market for barley. Last year, a big fire at a hop warehouse in Yakima destroyed up to 4 percent of the U.S. crop, a county brewer said. And now, drought and heat waves in the western United States and Europe have affected both barley and hops. "It's just really a supply-and-demand issue," Friberg said. "I call it the perfect storm." Barley prices, and those of wheat, also used in some beer, have hit all-time highs, said Mary Palmer Sullivan, program director for the Washington Grain Alliance in Spokane. "We've lost a lot of acres over the years to crops that are more profitable," Sullivan said. "Ethanol's had a big impact on the demand for corn in the Midwest." Prices for barley have doubled, Sullivan said, and for hops they've gone up as much as 600 percent depending on timing, said Pat Ringe, co-owner and brewmaster at the Diamond Knot Pub and Brewery in Mukilteo. For him, hops have gone from about $4 a pound last March to nearly $20 a pound, he said. Some brewers lock in their prices for hops or barley for up to a year with contracts with suppliers such as Great Western Malting or the Hop Union in Yakima, while some buy it a bit at a time on the "spot market." Ringe, who uses the contract method, said that before, he could pay for the hops as they were delivered under the prices agreed to in the contract. For his next contract, which takes effect soon, "we have to pay it all right now," he said. Ringe said he and the others at Diamond Knot haven't decided if, or how much, they'll raise prices at the pub. Unlike Scuttlebutt, Diamond Knot doesn't distribute to stores. The business has done well in recent years and Ringe is thinking it might be able to absorb the increase if the cycle is short, he said. "We might just ride it out," he said. The increases will hit microbreweries harder than mass producers of beer for several reasons, local brewers said. For one, small brewers tend to use more hops for flavor. Also, the big beer companies have full-time financial teams and forecasters who do nothing but work the market for the best prices, Ringe said. The big brewers use more corn and rice already, "as sort of an extender," Ringe said, so it's easy for them to add a little more. "It adds fermented sugar without really any flavor or color." Microbrewers can't adjust in the same way and maintain their same quality, they said. "We're purists," said Scuttlebutt's Bannan. "We brew the traditional beer way." For barley, Scuttlebutt just signed a contract for next year's supply at a 70 percent increase, Bannan said. For hops, he paid about double the previous price for his last batch, which he noted is good compared to what some others have paid. He got in just before the last increase, he said, but he knows it's going up again. Lazy Boy Brewery, a small operation near the Everett Mall, distributes to pubs and has a tasting room. They plan a price increase Jan. 1, co-owner Mike Scanlon said. How much, he said, "we haven't quite decided." Several drinkers said they wouldn't be deterred if and when prices rise. "It's not going to stop me," said Mic McLaughlin of Everett, one of a group of four guys having a brew on a recent afternoon at Diamond Knot. Reporter Bill Sheets: 425-339-3439 or sheets@heraldnet.com.

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