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Inside Ale Street
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| Hops and Barley Shortages Will Mean Higher Prices |
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| Written by Jack Curtin | ||||||
| Friday, 30 November 2007 | ||||||
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Dan Weirback finally decided to take matters into his own hands. The president and founder of Weyerbacher Brewing Co. knew it was time for someone in the craft brewing industry to try and put the emerging crisis in the availability of both hops and barley into perspective.
His “A Treatise and an Appeal” was sent to the brewery’s email list and posted on the Weyerbacher website (www.weyerbacher.com/cwo/Home ) in early November, laying out the situation in stark terms: “You are going to see prices jump likely between 15 and 25 percent on the retail end for craft brews in a matter of weeks...In late September I was told…that malt was going up about 40 percent and hops 30 to 40 percent. I started calling suppliers and they confirmed this was true, and also they have no prices locked in yet. Additionally, I was informed that many farmers are not honoring their contracts to the fullest extent (don’t blame the farmers please)… When we finally got nailed down pricing last week, one malt price was up 45 percent and the other up 56 percent. Plus, we were told to be happy that we’re able to get the supply (with growth) that we’ve asked for. Some brewers will not be so lucky… [With regard to hops], rather than going up 30 or 40 percent as expected, US and European hops have gone up 400 percent! That’s not a typo, 400 percent. There is not enough to go around…” All of this, Weirback concluded, means that Weyerbacher will probably have to increase its prices to wholesalers by at least 12 percent, even more for beers which are hops-intensive. He’s talking $2.50 to $4 per case at wholesale, and that’s basically just to cover costs without any significant profit markup. That translates into increases of 20 percent or more at the retail level. Hops of any and all varieties are at a premium because of several factors, the most significant being shortages across the globe this year due to poor weather conditions and the fact that there are fewer growers and less acreage as a result of the hops glut for most of the previous decade. The “safety valve” of New Zealand which many US craft brewers began turning to last year is disappearing as brewers in especially hard-hit Eastern Europe seem willing to pay whatever prices needed to get their supplies. And the weak American dollar is attracting brewers from abroad who are offering top dollar for US grown varieties. The problem is exacerbated for craft brewers, Ralph Olson of Hopunion told members of the Brewers Association in an online presentation in November, because most of the world’s hops are, obviously, purchased by large mainstream breweries who are primarily interested in high-alpha bittering hops rather than the aromatic hops which are crucial to so many craft brews. That means, he said, that growers will replace low-yielding hops, mostly aroma ones, with high-alpha varieties. “There will probably be a change from the hops many craft brews are using right now,” he said. Brian O’Reilly, brewmaster at Sly Fox Brewing Co. agrees. “With high alphas, the farmers get more bang for their acre and the brewers get more bang for their dollar. It’s about the big guys, not about us.” Weyerbacher and Sly Fox each face specific hops concerns which exemplify how the shortages can disrupt key craft products. The former’s Double Simcoe IPA has been a recent breakout beer, moving quickly from seasonal to year-round brand. “I have 3,500 lbs of Simcoe left over from last year’s contract, thankfully,” he says, “and I got that in house in September. But when I went to place my order for next year they said I couldn’t get any. I was told that they’re already 20,000 lbs short. Okay, I figure I can still probably keep Double Simcoe available for maybe eight months and I can live with that, but am I going to be able to get any Simcoe at all for 2009? That’s the big question.” At Sly Fox, the IPA Project, an annual program based around a series of ten limited-release single hop IPAs brewed throughout the year which culminates in a day-long event in December at which all are on tap and Odyssey Imperial IPA, brewed with all the varietals, is released, was scheduled to double in size this year. “The project has really caught on in New York,” says O’Reilly, “we’ve already signed up as many bars as we can supply and have a waiting list. To do that, we have to brew twice as much and that means, obviously, doubling our purchases of each varietal. Right now, we have only six varietals lined up for sure and we’re scrambling.” The shortage of malted barley is a more complicated and potential enduring matter, involving not only poor crops but the increasing conversion of farmers’ fields from barley to corn as bio-fuel crops which will command higher prices. Ian Ward of the Brewers Supply Group told that same online gather of BA members that there is a shortfall of over one million metric tons this year and that poor returns for growers, unless there is a price correction, will continue to lead to alternative crops being chosen. An analysis of 11 malt prices provided by Sly Fox brewery operations manager Tim Ohst shows increases ranging from slightly over 33 percent for pale wheat to nearly 55 percent for acidulated malts, with a 43 percent average increase overall. The elephant in the room for both hops and malts is that contracts in hand are not nearly as reliable as grains in the brewery. “With hops especially, until you have them in house, there is no real guarantee,” said a brewer who chose to remain anonymous. “None of us can be sure the ones we contracted for will still be there in May or June, not when desperate people start waving big bucks around and offer to pay any price to get what they want.”
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