Beer prices to rise

After absorbing the rising cost of beer passed on through distributors and wholesalers for four years, the owners of the Hair of the Dog pub finally raised prices on domestic bottle beers by 10 cents.

The pub's owners, who also own Terminal Brewhouse, made the decision after years of being on the receiving end of price hikes ranging from 50 cents to $7 a case from their distributors.

"We didn't want to do it all," said Matt Lewis, operating partner for Terminal and Hair of the Dog.

With news reports having come out that the nation's large breweries are preparing for price increases this fall to make up for falling sales and rising commodities prices, local brewers and restaurant owners said they are doing what they can to keep price hikes at bay.

Miller Hedges, part owner of Market Street Tavern and Tremont Tavern, said he has seen prices from distributors go up on certain domestic beers.

"We are lowering our margins and absorbing it as best we can," he said.

The sales volume at both restaurants has remained steady in recent months, and he said as long as it does, he will hold off on raising prices.

David Sharpe, regional brewer for Gordon Biersch, said there are several theories about what is driving the price increases at large breweries where popular domestic beers like Budweiser, Miller and Coors are produced. One possible explanation, he said, is that the hikes are the result of helping to pay for industry consolidations.

But commodities prices, Mr. Sharpe said, are a different story altogether.

"Since two years ago at the high, things have kind of come down a little bit. They're still not where they were before the sharp increase, that's for sure."

Both Big River and Terminal charge $4 a pint for their craft, or small-batch, beers and both restaurants said sales volume had remained steady in recent months.

Mr. Lewis attributed that to the growing popularity of craft beers, which represent the only part of the beer market that is growing.

The craft brewing industry grew in volume by 5 percent and in dollars by 9 percent in the first half of 2009, according to the Brewers Association. Overall U.S. beer sales are down 1.3 percent in the first six months of 2009.

"I don't think the demand for beer has diminished at all. The demand for certain beer is down," Mr. Lewis said. "People are drinking better beer."