Business Up, Profits Down

A nice article by the Eugene Register-Guard about the squeeze local brewers are finding on their profit margins, thanks to hop prices:

Eugene-based Ninkasi is one of the companies feeling the pinch. The brewery, which is restructuring its warehouse in preparation for a new brew master, needs to expand to remain successful, Floyd said, even in the face of rising costs.

Ninkasi has responded to the increase in hops prices with some short-term price increases of its own, and by reworking some of its formulas to deal with the realities of fewer available hops and higher prices. “We have subtly changed some recipes,” Floyd said.

With only a brewing operation, Floyd said he’s not able to compensate for the rising hops prices through other revenue sources, the way a restaurant can.

“We did raise our prices but our prices were not as high as other brewers to begin with,” Floyd said. “We were actually able to sell additional units because our prices are lower.”

Despite selling more kegs, Ninkasi’s profit margins are still being squeezed.

By the way, in that first paragraph I quoted, it mentions Ninkasi looking for a new brewmaster. Anyone know anything about that? Odd.