Beer 511

Recently I came across a blog post which mentioned that Mexico’s Grupo Modelo and Heineken, who has stopped brewing on March 30^th, were saying that, with Mexican federal guidelines coming out,  they were now ready to resume production as soon as June 1^st.

Naturally, the brewing shut down in Mexico has hurt all sectors of Mexico’s beer industry. 

Despite some local booms in demand and price for craft brews, as the stock of Big Beer dwindled, it has been estimated that the crisis could cost Mexico 50% of its craft breweries.

The beer shut down in Mexico -just talking now about the big industrial sector- has also had significant effects upstream and downstream.  Downstream, there are the 600.000 jobs directly and indirectly tied to industrial beer, including those at countless bars and restaurants for whom beer sales accounted for 40% or more of their income.   Upstream, there are some 4.000 farmers who produce the barley.

And those ripples extend surprisingly far afield: Upwards of 75% of Idaho’s barley crop is destined to be malted, and most of that is destined for breweries in Mexico.  Breweries which are currently paralyzed.

With barley backed up on the farms and dropping in price, and uncertainty for what’s coming, it is likely that Idaho barley farming acreage will go down this year and next.  According to the Idaho Barley Commission, Idaho’s overall agricultural sector -potatoes included- could take “up to two years” to recover.

And, Idaho farmers are not alone in their predicament.  Southern Montana and Northern Wyoming’s barley producers have been informed by Briess Malt that it can guarantee purchase of only 50% of what it had contracted. 

And, of course, the worldwide slow-down has effects on other areas that are of concern to us a beer fans and brewers.

The NW hop sector had been planning on increasing acreage this year. Instead, Southwestern Idaho and Southeastern Oregon hop growers plan to cut back by 5% to 20% from a year ago, depending on the varieties.

And, we have yet to see what effect the economic downturn, cooling relations with China, and the slowdown in global shipping will have on equipment price and availability.  The brewing industry uses a lot of stainless steel, for example. The last time there a big trade dispute with China something as basic as a keg became pricey and hard to get.

The good news is that, bit by bit, the US economy is starting to reopen. 

One may feel that it is too fast or too slow, but for a lot of brewers it certainly can’t come soon enough.

Recall that at the end of March the Brewers Association surveyed US craft brewers and about six in 10 said that a 3-month closure could well drive them out of business.

We’re heading into that 3^rd month. 

Even with to-go and mail orders helping out, most craft breweries have still seen drops of 60-90% in revenue.

And it’s crunch time in other ways too.

For example, many breweries are sitting on hundreds or thousands, of gallons of beer that has been aging for a month or two, or longer. They can package that beer and sell it, but they can’t be as confident of the shelf-life and sustained quality of that beer.  

The BA suggests monitoring the stock daily and pulling it if starts to taste off, and adjusting the best-by date on packaging to account for the time that the beer has already aged. It’s simple and reasonable advice, but it covers what could be some difficult choices for brewers:

Can they afford to invest in canning and selling beer that may be OK, but no longer tasting “on-brand”, that no longer represents what they’re about?

On the other hand, can a small brewery already facing financial hardship afford to dump all that beer, knowing that that may mean no product available to sell for a month, just when the economy is starting to reopen?

Of course, we -as consumers and beer supporters- don’t have to wait until the “Opening”, with a capital O, we can help right now by continuing to support our local and regional breweries and taprooms.

And don’t forget to tip the staff.