Hop demand increases, small brewers battle shortages, higher prices

Hops: Craft brewers love them. Craft beer drinkers love them. The problem is that, as an agricultural product, there’s only so much product to go around. Growing season is in full swing and next year’s harvest is right around the corner, beginning in late summer / early fall. Craft Brewing Business has written extensively about the importance of establishing your hops supply contracts early. As more small craft brewers enter the market, the chance of a shortage should come as no surprise. Yet, new craft brewing start-ups are battling just that.

KCRG in Iowa has reported that local microbreweries are struggling to find a steady hops supply and pay for the highly priced, in-demand product:

The growing desire for more flavorful, hoppy beer is happening at places like Another Road Brewing in Marion, due to open for business in late May.

“It’s really nice when you can get something that’s really grapefruit-y, or really mango-y,” said Alex Zoll, owner and manager. Zoll uses several varieties of hops to achieve those flavors, and he’s noticed a jump in their prices from his supplier. “They raised the price on two of ours, both the Simcoe and the Amarillo, close to 89 cents a pound, which has brought it up to about $22 a pound at the moment,” Zoll explained.

Teresa Albert, owner of Millstream Brewing, said a big part of the price hike and shortage in certain hops, is the fact that small breweries have exploded in the U.S. in the last two years.

She calls that a double-edged sword: “It’s fabulous for craft beer, because it’s creating such an awareness, and we’re seeing a 10 percent growth every year, so it’s good for us, it’s good for them.”

It also means hops growers are racing to catch up with demand.

For the full story, be sure to head over to KCRG.

And as Bloomberg Businessweek pointed out, this demand continues to drive up hop prices (the average price for all hops was $3.59 per pound in 2013, nearly twice as much as in 2004). Keep in mind the hop demand isn’t necessarily driven by consumers, even though craft enthusiasts love IPAs. In addition to the ever-growing list of new brewers, craft brewing industry staples are constantly upping the hops ante in each new release, searching for that better, attention-grabbing IPA. From Businessweek:

 Aroma varieties cost more because of lower yields, says Ann George, executive director of the Hop Growers of America, and the higher demand is luring some growers to remove alpha varieties to grow the aromas. Aroma hops can cost two to as much as seven times more per pound than alpha hop varieties, according to Chris Swersey, technical brewing projects manager at the Brewers Association.

Cost has not stopped craft brewers from using higher-priced hops in high concentrations. While the average beer is made with about 0.2 pound of hops per 31 gallons, craft brewers use 1.25 pounds, according to George.

Consumers’ desire for hop-heavy craft beers has stabilized, [Swersey] says, so hops sales now will be driven by volume increases rather than shifts to even more flavorful varieties.

For the full story, be sure to visit Bloomberg Businessweek. And don’t miss our in-depth hop feature detailing the importance of a hops contract and what to look for in a distributor. After that, check out all our hops-focused features.