Beer Quarterly Q1 2022: Singing the Inflation Blues
This period of inflationary pressure is unlike any we have experienced over the last 20 years. Inflation is ramping quickly and hitting brewers on virtually every line item. Furthermore, the usual levers to offset inflation may prove harder to use.
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The input cost inflation that is impacting every line item for brewers has our attention – but it’s not the current pressure on the COGS (cost of goods sold) levels that we are worried about. From here, we see a number of input costs that we expect will continue to rise, others that could stay elevated for an extended period, and little relief on the horizon.
Neither the price increases we see in the market right now nor 2022 guidance seem to reflect the full magnitude of the cost challenges that are coming our way this year, in 2023, and beyond. We want to issue a warning that the industry may face a significant and sustained challenge that requires creative solutions from outside the usual playbook.
Additionally, the sustainability theme will continue to resonate with consumers and regulators until well beyond this decade. For brewers, there is a chance here to create a strategic business advantage.