Dry lager yeast -- WTF prices?!

[bwarbiany]

So I was hoping to pick up some SafLager S-W34/70 to do an Oktoberfestbier.

Brewing 10 gallons, needing proper pitch rates to pitch cold, that means I'd need 4x of the 11.5g packs.

And those packs are $6.49 each at either Austin Homebrew or Northern Brewer. WTF? That'd be $26 for yeast??

If I chose S-23 from either place it's about $5.50 each, and even at morebeer.com, it's $3.99 each.

Is this normal, or is it a shorter-term price blip?

I hate to say this, but at these prices I might have to use liquid...

[lexuschris]

Dang! That is much higher than old US-05!

Guess it's time to bring out the flask & stirplate!
--LexusChris

[oc eric]

So I was hoping to pick up some SafLager S-W34/70 to do an Oktoberfestbier.

Brewing 10 gallons, needing proper pitch rates to pitch cold, that means I'd need 4x of the 11.5g packs.

And those packs are $6.49 each at either Austin Homebrew or Northern Brewer. WTF? That'd be $26 for yeast??

If I chose S-23 from either place it's about $5.50 each, and even at morebeer.com, it's $3.99 each.

Is this normal, or is it a shorter-term price blip?

I hate to say this, but at these prices I might have to use liquid...

How much at your LHBS ?

[bwarbiany]

So I was hoping to pick up some SafLager S-W34/70 to do an Oktoberfestbier.

Brewing 10 gallons, needing proper pitch rates to pitch cold, that means I'd need 4x of the 11.5g packs.

And those packs are $6.49 each at either Austin Homebrew or Northern Brewer. WTF? That'd be $26 for yeast??

If I chose S-23 from either place it's about $5.50 each, and even at morebeer.com, it's $3.99 each.

Is this normal, or is it a shorter-term price blip?

I hate to say this, but at these prices I might have to use liquid...

How much at your LHBS ?

I think it was still $6, which IMHO is a ridiculous price! Of course, I'm not blaming the fine proprietor of my LHBS for the price, I'm just lamenting the general situation. And while I think it's a ridiculous price, I *did* buy 4 packs from said proprietor.

I've been noticing an uptick in dry ale yeast pricing as well, and I can say that I'm not a fan of it.

As an LHBS owner, do you have any sense what's driving the price up right now? Based on what you can see, is it a temporary shortage in the market, or is this a long-term change?

[ScottK]

I can understand shortages in hops or barley, but yeast? Am I mistaken or isn't it something that can be propagated indefinitely? There aren't any supply issues that would create a shortage.

[bwarbiany]

I can understand shortages in hops or barley, but yeast? Am I mistaken or isn't it something that can be propagated indefinitely? There aren't any supply issues that would create a shortage.

I'm thinking demand side. I don't know to what extent homebrewing has grown over the past few years, but I know that the general acceptance of dry yeast [as measured by people on homebrew forums] has increased significantly just since I started brewing.

I'm wondering if Danstar & Fermentis didn't increase capacity quickly enough to meet demand.

Of course, I just realized that both companies have large commercial brewery divisions, and I have to think homebrewer demand is a drop in the bucket in comparison... But maybe pro brewers have expanded dry yeast usage as well?

[oc eric]

I've been noticing an uptick in dry ale yeast pricing as well, and I can say that I'm not a fan of it.

As an LHBS owner, do you have any sense what's driving the price up right now? Based on what you can see, is it a temporary shortage in the market, or is this a long-term change?

Brad, I've been giving this careful consideration. I am now on my third reply (the previous two I deleted before posting). Here is my best guess: the production of high quality dry yeast is costing more to make, so yeast companies have to charge more for their yeast. Also, consumer confidence has risen on dry yeast, so now retailers can charge more than bargain prices to sell units of yeast. That dry packet of "ale yeast" that was $0.50 can't be found anymore. Now it is high quality dry yeast of various strains, that costs as much to produce as liquid, so it retails for near what liquid yeast retails for. The upside, dry yeast is still cheaper than liquid, and now you're getting the best yeast you can for your beer. Sounds like a WIN to me. "Make the best, not the cheapest beer you can". Oh, and I stock all the Fermtis, Danstar, Lalvin yeast so it is available all the time.

[lexuschris]

From a purely macro view, its either a supply side constraint or a demand site increase. I favor the latter and blame you Brad. You've talked everyone into the benefits of 'dry yeast' and now the demand for said yeast is going through the roof! As demand increases, so do prices.

Or, it might have something to do with the rapid destruction of the dollar these past few months... QE3 anyone? A buck just doesn't buy what it used to..... <sigh>

--LexusChris

[Brewfoo]

Could it also be a macro brewery conspiracy? If homebrewing was in fact expanding in popularity, it's not far fetch to think they might view us as a threat like the many micro breweries and buy out the desired hops and now yeasts...

Let me check snopes.com and get back to you on this.

[brahn]

I also think the price increase is purely demand driven. I don't think Fermentis or Danstar have any problems producing enough yeast to meet the homebrew market demands. The big price increase from Fermentis was several years ago, although there may have been some smaller increases since then. I don't think it's temporary unless demand drops.

My understanding is that commercial use of dry yeast is mostly limited to breweries that don't have the expertise or equipment to go several generations with their yeast. I believe the recommendation is not to re-pitch the dry yeast at all, or to only go a few generations. Oddly enough, this tends to make dry yeast more expensive in a commercial environment than liquid yeast.

[bwarbiany]

I've been noticing an uptick in dry ale yeast pricing as well, and I can say that I'm not a fan of it.

As an LHBS owner, do you have any sense what's driving the price up right now? Based on what you can see, is it a temporary shortage in the market, or is this a long-term change?

Brad, I've been giving this careful consideration. I am now on my third reply (the previous two I deleted before posting). Here is my best guess: the production of high quality dry yeast is costing more to make, so yeast companies have to charge more for their yeast. Also, consumer confidence has risen on dry yeast, so now retailers can charge more than bargain prices to sell units of yeast. That dry packet of "ale yeast" that was $0.50 can't be found anymore. Now it is high quality dry yeast of various strains, that costs as much to produce as liquid, so it retails for near what liquid yeast retails for. The upside, dry yeast is still cheaper than liquid, and now you're getting the best yeast you can for your beer. Sounds like a WIN to me. "Make the best, not the cheapest beer you can". Oh, and I stock all the Fermtis, Danstar, Lalvin yeast so it is available all the time.

Eric,

Thanks for your response. I know this sort of discussion is delicate for you as a retailer, and I don't want to get you spilling any secrets here, so I understand your desire to be careful. If at any point you need to drop out of the discussion for reasons associated with AHP, nobody would hold that against you.

That said, I don't see this as a retailer issue. We're talking about national distribution, and price hikes coming from all the major online homebrew emporiums. If wholesale prices were not increasing, and supply was plentiful, one of the many online stores (Morebeer, Northern Brewer, Austin Homebrew, etc) would be selling cheap to try to win market share. The fact that they're all raising their prices (perhaps not at the same rate, but they're all trending up) suggests that wholesale prices are rising.

It's possible that production costs have increased, but I don't see any particular reason that would be the case. Granted, I'm not in the industry. But I can't imagine the technology needed to produce the yeast has changed appreciably in the last few years.

It's possible that homebrewer's yeast was always sold by the producers at low margin or even as a loss-leader to evangelize dry yeast for future commercial users, and that the rapidly-rising consumer confidence allows them to harmonize prices to more sustainable margins. I don't have any evidence for this, but it is a plausible explanation.

My gut feeling is that demand is growing faster than supply, and that explains the rise. If my gut feeling is correct, the likely result will be Fermentis and Danstar increasing capital investment and eventually ramping up production -- leading to costs coming back down in the future. However, if my gut feeling is wrong, and this is a long-term issue, I might have to start getting into things like yeast harvesting and culturing in order to manage it myself.

"Make the best, not the cheapest beer you can".

I completely agree, which was why I came and bought 4 packs of W-34/70 from you despite my grumbling about the cost

[backyard brewer]

My gut feeling is that demand is growing faster than supply, and that explains the rise. If my gut feeling is correct, the likely result will be Fermentis and Danstar increasing capital investment and eventually ramping up production -- leading to costs coming back down in the future. However, if my gut feeling is wrong, and this is a long-term issue, I might have to start getting into things like yeast harvesting and culturing in order to manage it myself.

Start Ranching.....

You're missing one key element to your hunch; outside competition. There are only, what 2? dry yeast producers? If demand ramped faster than supply and they can control it with price, what incentive do they have to make a capital expenditure to lower revenue? As long as they are competitive with liquid yeast producers they really don't have other competition other than each other and if you're going to use dry yeast you have no real option other than them.

So, IMHO, short of a new player in the game producing quality dry yeast at a lower market price, there is no incentive for the other "Big 2" to make any effort to reduce prices or increase output. If they do, I would suspect it would be to maintain a competitive advantage against one another to not being out of yeast, but not to reduce cost. The demand would have to drop with a glut of supply for that to happen.

Again, MHO.

[lexuschris]

You're missing one key element to your hunch; outside competition. There are only, what 2? dry yeast producers?

Excellent point! Along with Brent on demand side increases...

But I still contend that a portion of that is early signs of what printing 2.7 trillion dollars does to the U.S. dollar.... Inflation!

Food prices have been increasing 2%-8% year over year with a few standouts going double digets... http://www.ers.usda.gov/Briefing/CPIFoo ... eindex.htm

If this post were on zerohedge.com, this is where I would say: Silver bitchez!

--LexusChris

[bwarbiany]

You're missing one key element to your hunch; outside competition. There are only, what 2? dry yeast producers? If demand ramped faster than supply and they can control it with price, what incentive do they have to make a capital expenditure to lower revenue? As long as they are competitive with liquid yeast producers they really don't have other competition other than each other and if you're going to use dry yeast you have no real option other than them.

Yeah, but that's not usually how the incentives line up in any industry I've ever worked in [granted, that's limited to electronics, but most of my time has been spent in markets where there are a very small number of major players -- and those major players are in CUTTHROAT competition]. When you're making high profit margins, your incentive is to sell more to make that same profit margin on a bigger revenue base. If you're Fermentis, you don't cooperate with Danstar, you try to take market share from them. The incentive is *always* to make more money. It's easy to say that they're not really in competition with each other, but Fermentis is a division of what appears to be a publicly-traded corporation, and Danstar is part of Lallemand, which is privately held but in general is a larger company than just Danstar. Coming from the corporate world, I'll tell you that if profits are rising, the bosses are pushing to increase unit shipments to take even more of the pie.

I'd also argue that they're not just in competition with each other. They're in competition with White Labs & Wyeast, as well as with homebrewers like me and craft breweries that will start ranching their own yeast. BTW, if prices stay high, you'll also see Coopers and Muntons getting into the game IMHO. Nobody *has* to buy their product. We buy it because it's cheap enough and high quality enough that we don't start investigating alternatives. But if this is a long-term price increase, guys like me will start investigating alternatives.

If this is demand-driven, I'm not worried. That'll work itself out.

[bwarbiany]

But I still contend that a portion of that is early signs of what printing 2.7 trillion dollars does to the U.S. dollar.... Inflation!

Food prices have been increasing 2%-8% year over year with a few standouts going double digets... http://www.ers.usda.gov/Briefing/CPIFoo ... eindex.htm

You do have a point there. Danstar and Fermentis both being foreign companies, the weak dollar definitely may have an impact here. Particularly with Danstar, which is Canadian, as their currency has remained quite strong compared to ours over the last few years.

I'll inquire on BA and homebrewtalk to see if any Canadian or European homebrewers have seen a similar price spike.