Brexit impact on homebrewing & Beer+Cider

[madscientist451]

All the predictions are pointing to a weaker British pound and a stronger dollar following the Brexit vote.
I'll confess I haven't followed this story much until the day of the vote, I just didn't care that much, but now realize that there could be an impact on homebrewing and commercial Beer and Cider markets.
--With the lower pound and stronger dollar, imported UK malts will be priced lower. I doubt we'll see a lower price at the homebrew level, but perhaps there won't be any upward pressure on prices. Continental European malts and hops prices may go lower, all depends what the Euro does against the dollar. This downward price pressure may cause US beer ingredient producers and suppliers to re-think any plans they had to raise prices.
--UK cider apples that are in demand by US commercial cider producers will now be cheaper to import, although the extremely tight US supply of specific types will continue for some time and I don't see prices going too much lower, but not up much either. This could have an impact on growers and investors looking to start cider apple orchards, and in turn future supplies and prices.
--Commercial Beer and Cider from the UK will be available at lower prices.
This is good news for consumers but not so good for the highly leveraged
large "craft beer" producers. Some are saying the is an over capacity in the brewing industry right now and an industry shakeout is overdue.
A price war has been "brewing" for a while now with Goose Island cutting prices in some markets to gain market share and move inventory. The arrival of lower priced UK beer could really get some price competition going, which, IMO, is greatly needed as the retail "craft beer" prices seem somewhat ridiculous.
If (and when) a domestic price war gets started, exports of US beer to UK and Europe could also be lower and this would further impact profitability of US producers, further accelerating the overdue industry shakeout.
Here's an article from before the vote, but features some comments from a US craft beer producer and exporter:
http://www.ibtimes.com/what-does-br...dum-european-union-american-companies-2383431

 

[TheMadKing]

Interesting points.

About the only thing I have a comment on is the "over capacity" I really don't think that's the case. The rise of the local town brewery supported by in-house sales is still going on. I think the market will bear 1 brewery per 15000 people or so. I do agree that the distribution market is choking a bit because of the stranglehold that BMC has on it, especially in bass-ackward states like Georgia where breweries can't sell direct to consumers.

 

[Rev2010]

With the lower pound and stronger dollar, imported UK malts will be priced lower. I doubt we'll see a lower price at the homebrew level

In theory yes, that is how things should go. However, it all depends on the American businesses reselling the product to us - do they want to do the right thing or keep the extra profit for themselves? So many times I see news articles talking about markets and how certain items will sell for less and sometimes they do and also often they do not because the business is keeping that extra profit for themselves. So it really all comes down to the reseller. Sometimes they even have excuses such as "well the price can go back up at any moment so we're not making the adjustment yet just in case".


Rev.