Hop Shortage / Beer Prices

I was raised on a farm in Louisiana. The one you can be assured of is that if a commodity is priced high then the producers will produce all they can and expand acreage if possible. I don't know much about hop growing but I do know producers will increase acreage if possible to cash in. Hopefully just a temporary situation and good for the hop growers to make some profits.

 

will work for hops.

 

Cost of goods is quite low for beer, any impact it will have should be minimal.

 

Will grow hops for hops?

 

Just started growing my own hops this year. I'll be off the grid in two years lol. But not really because there are too many good beers out there to try. I can't make them all but I can sure (attempt to) try them all

 

For hops sake!

 

Hops in the grand scheme of things are not a HUGE cost for a beer. Here is an estimated variable cost breakdown for a 15 barrel batch. I forget the OG/IBU of the recipe I used to estimate, but it was supposed to be fairly average.


Malt 720.00
Hops 144.00
Yeast 50.00
Water and Sewer 25.00
Gas/Elec 45.00
CO2 20.00
Cleaning Chems 40.00
Federal Taxes 105.00
State Tax 41.85

 

The recent reports on the "hop shortage" is a bit of it depends on how you look at the issue. There are two markets for hops a) contracted and b) spot market The articles tend to focus on the spot market prices and more popular hops which have prices that vary a lot. Most medium to larger breweries do some or a lot of contract purchases for hops, malts, etc. so they can plan their production schedule and know they have the raw materials they need. In our case we contract out 3 years for hops, which is pretty normal.

 

Don't forget labor, utilities, distribution costs (I'm not sure how this part works, but I know that shit ain't free), building leases (if applicable), website hosting...the list goes on and on. Overall, hops are a teeny tiny percentage of the final cost of beer. I'm not saying this is nothing to be concerned about, but the impact should really be minimal in the grand scheme of things.

 

I personally don't find that article very worth while. I saw one very similar a few weeks back. A brewery here in WV hasn't mentioned any difficulty in getting hops, even some smaller type varietals like hul melon and mandarin bavaria. So if he can get those hops, I can't imagine Sierra nevada is having any difficulty

 

They do grow hops on the largest hop farm in the world in Northern Idaho, about 1800 acres.. There you go. Mainly aroma varieties IIRC.

 

Comparing 2014 to 2004 raised some flags for me. There was the shortage about 2008/2009 that saw the spot market go to $30 a pound or more. Then they planted more, and the prices came back down.

 

More in-depth and knowledgeable info on the hop industry and the coming possible shortages/price increases can be found at the blog of 47 Hops, written by the former director of the Hop Growers of America - Greedy Growers and Dirty Dealers!

See also their earlier post - 2014 STATE OF THE U.S. HOP INDUSTRY

 

Excellent articles. Many industry expert have stated that hops have been underpriced for a long time, and the growers make enough profit in a price spike to get them through the lean times.

My memory was off on the shortage, it was 2007/2008.

 

Is there a way to purchase hop commodities on the stock market? Similar to gold, silver, and oil. Seems like it may be a good investment.

 

They're the ones buying it up. Look at what's going on with Goose Island - a new 'limited release' IPA every few months (ten hills, endless IPA...) They're jumping from farm to farm buying up all they can to make it tougher on the little guys. This is a real and deliberate strategy being executed by AB. They use a static amount of hops in all their AALs, so Goose in their go-to brand for using as much hops as they can - for no other reason than to deprive other brewers.

 

If it is indeed a problem, here's a solution: All American brewers stop making IPAs for a year. There are many on this forum who seem to be sick of them or not even like them at all, right?

 

So, you are a member of the AB strategic planning team, are you?