How Much Will You Pay For Your Next IPA?
Mike Laur - November 14, 2007
Drink up, folks - the beer you love today may be gone tomorrow.
Or at least taste different.
Oh, and be prepared to pay more when you can get it.
Blame it on the President. And the weather, suburban sprawl, fires, the growth in craft beers, and your very own taste buds.
The simple fact is that barley and hops prices are going through the roof, and brewers everywhere are eventually going to pass along these increased costs to consumers - assuming they can still get the raw materials they need to keep making beer. For at least the next few months, it's going to be rough sailing in the beer business.
Beer is basically an agricultural product. Malted barley and various flowering hops are the primary ingredients (besides water and our friend yeast) in virtually every beer. Sharply decreased supplies and increased demands for these two commodities equates to scarcity, shortages and higher prices for the raw materials brewers depend on and beer drinkers crave.
Several brewers at the recent All Colorado Beer Festival in Colorado Springs expressed alarm at the especially radical jump in hops prices. Says Alan Stiles of Shamrock Brewing in Pueblo: "We paid two dollars a pound two years ago, and it's up to twenty dollars a pound today for some of our finishing hops. This is going to close down a few breweries."
Why the Perfect Storm:
1. A decade-long oversupply of hops forced many farmers to switch to more lucrative crops, like apples, cherries and (gasp!) grapes. Some land owners sold their farms entirely, to cash in on soaring land prices that real estate developers are willing to pay. With 230,000 acres of hops planted worldwide in 1994, and only 113,000 acres in 2006, you didn't have to be Ben Bernanke to figure out that a shortage was looming.
2. About 2 million pounds of high-alpha hops went up in pungent smoke on October 3 when a 40,000 square foot warehouse in Yakima,WA burned down. Hops bales are perennially prone to spontaneous combustion. Representing only about 4 percent of the total US supply, the loss is estimated to have little effect on total supplies. But -
3. Poor weather in Europe - especially around harvest time - severely reduced hops yields, sending brewers in search of more hops from the US. And the glut of hops in warehouses that didn't catch fire has been bought up. For many brewers, hops are very, very hard to find.
4. Increased world demand (and President Bush's incentives to brew biofuels) leads farmers to grow more fuel-friendly grains and less malting barley. According to USDA figures, US corn production increased from about 6 billion bushels in 1993 to an estimated 13 billion bushels in 2007. Total US barley production decreased from around 400 million bushels in 1993 to an estimated 215 million bushels in 2007.
5. Australia - normally the biggest exporter of barley in the world - was hammered by drought in 2006, reducing exports by 60%, and things haven't been much better in 2007.
6. Beer drinkers have come to love rich, tasty beers, and more craft beer is brewed today than ever before. With lighter, pedestrian beers, hops and barley can stretch to make more, while the flavorful ales favored by most craft brewers require much more natural goodness in every bottle. For example, the same amount of gusto that goes into five barrels of Budweiser might only fill one barrel of Fat Tire.
Get ready for your favorite beer to change a bit.
It's not panic time just yet.
While there are many dire predictions of ten-dollar-sixpacks, most are guessing that the average price increase will range from twenty cents to a dollar a sixpack. Many brewers are hoping to hold the prices down by modifying their recipes, or making different kinds of beer.
Almost everyone agrees that big, hoppy IPA's will take a hit. There simply won't be enough cheap raw material to make that kind of beer as economically in the near future. Paul Gatza of the Brewers' Association is upbeat: "I would think brewers will try to keep their existing beers in the marketplace if they can," he said. "But this may put a damper on some of that innovation and experimentation for some of those hoppier beers, which is a shame." Think spruce needles, wheat beers, and all kinds of esoteric ingredients
Ralph Olson, president of HopUnion, a major supplier of hops in the US, lays it out in his statement, "The hop world is upside down. In the future we see the possibility of brewers shutting down for lack of hops. We are, in my opinion, in trouble."
Olson writes: "Certain varieties are getting a lot more expensive. A few varieties will run out faster than ever. Brewers have to be willing to try other varieties. Brewmasters, brewery owners, and marketing and sales managers must prepare for the potential need to substitute different hops, to replace varieties that currently give your beers their "signature" flavor. That's what we'll have to get used to, the fact that there may be slight flavor variations over the next several years, as the hop industry works to correct this situation. It's not going to get better soon, but will be likely just as bad, or worse, for the crops from 2008 and 2009, in other words, for beers brewed from now through 2010." What's A Beer Drinker To Do?
Shamrock Brewing's Alan Stiles looks on the bright side: "We're gonna try to keep prices down. Right now we're in pretty good shape. Our current hops contract is locked in - unfortunately at a high price, but we will get our hops. The supplier says if we don't want them, there's 20 or 30 other brewers in line behind us. Its pretty intense."
Today, more that ever, it's important: Support Your Local Brewer!
