From crop to pub, climate change will send beer supply chain costs soaring

Dive Brief:

A new study predicts that the price of beer could double because of agricultural shifts affecting one of beer's main components, barley, caused by climate change, reported Nature.
Due to an increased likelihood of extreme heat and droughts, barley yields worldwide could decrease by 3% to 17% by 2099, sending cost increases rippling down the supply chain, according to a study completed by climate-change economist Dabo Guan at the University of East Anglia in Norwich, U.K.
Worldwide beer consumption will likely drop considerably as well, according to the study, due to tightened supply and rising prices.

Dive Insight:

Using simulated models of four different possible levels of carbon emissions, the researchers determined the likelihood of extreme weather in barley-producing regions ranges from 4% to 34% depending on greenhouse gas emissions. Tropical areas are likely to see the highest hit in terms of yield, with more temperate climates feeling the effects less.

The next step for Guan was to determine the supply chain reaction to estimate price increases. A global average 100% increase in price between now and 2099 is the worst-case scenario, while a 15% increase in price is the best case.

However, some individual countries may see much greater price hikes than these averages, since the study factored in how much demand will be able to withstand the price pressure. The study predicts Ireland, for example, will see the price of beer increase three times over what it is today.

Unlike with fresh produce, the price of which often changes with seasonal availability and weather events, consumers are not used to fluctuations in the price of beer. Though it is an agricultural product, beer makers work to keep the price steady and absorb any pricing changes in their procurement pipelines apart from periodic increases due to inflation.

This study suggests the supply chain may not be able to sustain this price stability for much longer.

The researchers acknowledged that with the global food supply also threatened by climate change, beer may not be society's greatest concern, but Guan emphasized that bringing to light the effects on everyday staples could make the wider implications of more volatile weather and rising temperatures more relatable.