Commercial brewing is a dynamic balance of agriculture and manufacturing, and fluctuations on either side of the equation can ripple throughout the beer industry.

While the domestic hops market continues to grow and diversify, for example, it’s historically seen dramatic price swings across years-long cycles that have greatly affected both growers and brewers (read “A Lupulin Revolution,” Jan/Feb 2018).

Domestically grown barley has, likewise, seen great change for which farmers and brewers must continually account. And as livestock producers turn to less expensive alternatives such as corn and soy for animal feed, less barley is being planted and the bulk of that crop is increasingly dedicated to the brewing industry. The USDA estimates that fully 70 percent of the domestic barley crop is now used in beer production, which requires higher quality standards and now relies on a smaller pool of farmers.

In March, newly imposed tariffs raised levies on imported steel and aluminum by 25 percent and 10 percent, respectively. Shortly after the tariff went into effect, American Keg Company, the only American manufacturer of steel beer kegs, laid off one-third of its workforce. Even before the increased tariffs went into effect, their impacts were being felt as the price of domestically produced steel and aluminum rose sharply in anticipation of reduced foreign competition.

These changes, and other outside influences, have impacted the craft beer industry and highlighted the shifting landscape, in which brewers must attempt to position themselves and forecast future needs in the face of increased competition and a tightening market.

While New Belgium, the nation’s fourth-largest craft brewer, may not be as greatly impacted by an increase in the price of aluminum (given the small percentage of its beer packaged in cans), brewers like Oskar Blues, which sells the majority of its beer in cans, will more greatly feel the impact.

“[These tariffs have] the potential to increase our cost somewhere between 20 and 24 cents per case,” says Oskar Blues spokesperson Chad Melis. “If you look at our business knowing 100 percent of our packaged beer is in a can, and 70 percent of our total beer is packaged, the rough math is that it would affect our business about $400,000 per year.”

Melis also wonders how price fluctuation might impact charitable efforts like the brewery’s CANd Aid Foundation, which, in partnership with the Ball Corporation, has also donated more than 1 million cans of clean drinking water to communities in need across the globe.

“It’s a capital-intensive industry, and an unexpected increase in our cost of goods is certainly going to make it difficult for us to grow, add jobs, and invest in our communities. Eventually that pricing piece could make it to the beer drinker,” Melis says. “But given the current environment of the industry, with the international big brewers coming into play in the craft-beer segment, there have already been some significant headwinds and it’s a competitive time to be changing price, so we’ll have to find additional ways to curb that.”

It’s a complicated calculus for brewers, as they seek to grow their business and keep consumers happy.