Beer Industry Resources
12.7.08
Microbreweries Facing High Hop Prices
Since the end of 2007, the price for hops worldwide has been skyrocketing due to what many industry experts have described as a "perfect storm" of events that have led to significant shortages on the open market. This is making for a difficult year for American microbreweries, brewpubs, and homebrewers, who, unlike the huge "macrobreweries" like Anheuser-Busch and Miller, don't have long-term hop futures contracts that insulate them from rising costs.
So, how did this hop shortage occur? Well, the chain of events began back in the early 1990s when global hop production hit an all-time high of almost 250,000 acres planted. This created a huge excess of inventory, and because hops are often turned into hop extract which can have a shelf-life of several years, the glut grew and grew. This oversupply eventually pushed the prices down (sometimes below the cost of growing the hops in the first place) and many hop farmers went out of business or pulled up their hops in favor of more profitable crops. As of 2006, less than 115,000 acres of hops were planted worldwide.
Now, after a couple of years of poor hop harvests in Europe, a weak dollar spurring increased exports of hops out of the U.S., and the simultaneous exhaustion of the supply of hop extract that has been in reserve inventory, American craft brewers are being faced with hop prices that are in some cases 5-10 times what they were a year ago. A decrease in the supply of barley is also compounding the problem, so consumers are noticing price increases for most beer styles, with highly-hopped beers like India Pale Ales (IPAs) and the super-highly-hopped Double IPAs (aka Imperial IPAs) being particularly hard hit.
Exactly how long the hop shortage will continue is up for debate, but most experts see it lasting through the end of 2008 and likely extending into next year. Eventually the high market prices will coax more farmers into planting hops and the prices will begin falling as supply and demand return to a normal equilibrium.
If you're an optimist, the silver lining in all this is that it's just the sort of challenge that propels craft brewers onward to new innovations. As you probably already know, craft brewers are creative types who are constantly looking for excuses to tinker with new formulas and to try wild ideas, so don't be surprised if your favorite brewer starts experimenting with different (and more easily attainable) hop varieties, or unveils an excellent new lightly-hopped Scottish Ale or Bock. In the meantime, the ubiquitous IPA should still be available from most microbreweries, just expect to pay a bit more for one for the next year or two.
So, how did this hop shortage occur? Well, the chain of events began back in the early 1990s when global hop production hit an all-time high of almost 250,000 acres planted. This created a huge excess of inventory, and because hops are often turned into hop extract which can have a shelf-life of several years, the glut grew and grew. This oversupply eventually pushed the prices down (sometimes below the cost of growing the hops in the first place) and many hop farmers went out of business or pulled up their hops in favor of more profitable crops. As of 2006, less than 115,000 acres of hops were planted worldwide.
Now, after a couple of years of poor hop harvests in Europe, a weak dollar spurring increased exports of hops out of the U.S., and the simultaneous exhaustion of the supply of hop extract that has been in reserve inventory, American craft brewers are being faced with hop prices that are in some cases 5-10 times what they were a year ago. A decrease in the supply of barley is also compounding the problem, so consumers are noticing price increases for most beer styles, with highly-hopped beers like India Pale Ales (IPAs) and the super-highly-hopped Double IPAs (aka Imperial IPAs) being particularly hard hit.
Exactly how long the hop shortage will continue is up for debate, but most experts see it lasting through the end of 2008 and likely extending into next year. Eventually the high market prices will coax more farmers into planting hops and the prices will begin falling as supply and demand return to a normal equilibrium.
If you're an optimist, the silver lining in all this is that it's just the sort of challenge that propels craft brewers onward to new innovations. As you probably already know, craft brewers are creative types who are constantly looking for excuses to tinker with new formulas and to try wild ideas, so don't be surprised if your favorite brewer starts experimenting with different (and more easily attainable) hop varieties, or unveils an excellent new lightly-hopped Scottish Ale or Bock. In the meantime, the ubiquitous IPA should still be available from most microbreweries, just expect to pay a bit more for one for the next year or two.
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