Drinkers may have to accept price rises after the slump in sterling sends cost of imported ingredients and equipment soaring.
When the price of USD in GBP terms increases so does anything we buy in USD. Imported hops, a key ingredient of craft beer, is now more expensive and, as a result, the costs of production for brewers is rising. Consider the impact on the price mechanism? An inward shift in supply = higher prices = reduced consumer surplus. In addition, a weaker pound means it is more expensive to import the necessary capital to help expand production to meet the craft beer craze that has swept the country over the past year or so. On a positive note, this could mean a rise in demand for UK hop farmers as brewers switch to the, now cheaper, domestic substitute. However, brewers don’t really like UK hops, the climate isn’t quite right for certain varieties, and when your product is priced at a premium based on its superior taste, that is a problem. All in all, expect the price of your favourite APA (American Pale Ale) to rise.