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Beerflation is coming: Why your next schooner could cost $2 more


Beer consumption is returning to pre-COVID levels, but rising costs put pressure on producers, meaning you'll pay more.

Rising costs are an unwelcome feature for all of us.

But now, it is likely to extend to your local pub.

Figures released by social trading platform eToro show that input costs for producers are spiking.

The figures show raw ingredient costs including barley and malt have skyrocketed in the last 2 years by 104% and 87% respectively. This is largely due to the war between Russia and Ukraine, with the Eastern European nations supplying around 30% of the world's barley.

At the same time, the price of gasoline required for transportation is up 138%.

The only saving grace for beer producers is rice, which has dropped marginally in the last 2 years.

eToro's global markets strategist Ben Laidler predicts these tough times to continue.

"Our Beer Index tells us that stronger price pressures are brewing and stiffer price rises could lie ahead," he said.

"This could be unfortunate timing with the Oktoberfest starting in a couple of weeks and the football World Cup kicking off in November."

Costs everywhere go up for beer producers

Not only are the input costs rising for beer producers, but they have recently been slugged with a 4% increase in tax.

As such, beer drinkers are now likely to pay $10 on a schooner and $15 a pint in metro areas.

Brewers Association of Australia CEO John Preston points out consumers will pay more.

"Australians are taxed on beer more than almost any other nation. We have seen almost 20 increases in Australia's beer tax over the past decade alone," he said.

"Sadly, we're now seeing the impact as pub patrons will soon face the prospect of regularly paying around $15 for a pint at their local."

But should you buy into these higher prices?

Unfortunately, the surging price of beer doesn't necessarily mean you should buy the underlying asset, especially for those looking to offset higher costs through investing.

eToro's market analyst Josh Gilbert said investors should not just look at rising prices when buying any commodity.

"Instead, they should research and understand the fundamentals driving the price," he said.

But he does highlight their role in a volatile market.

"Commodities can help investors diversify their portfolios, especially when global markets are down but commodity prices are up."

"However, investors should remember that commodities are volatile, as proven by the year's price action," Gilbert concludes.

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