Beer Knowledge

A Shortage of Hops Threatens Your Supply of Beer?

Published August 12th, 2014

Who knew that the supply and demand portion of your economics class would find its way into your beer glass. But it has. Hop-rich beers have become so popular in the US over the last few decades, that, according to the Wall Street Journal, there is now a serious shortage of  the plant that's used to add bitterness and flavor to beer.

This shortage has led the price of hops to jump from $1.88  a pound in 2004 to $3.59 in 2013, according to the nonprofit Hop Growers of America. By the end of this year, choicer hops, like the Cascade hop, will likely ring in at over $10 a pound.

While all beers in general are impacted by this shortage and price increase, one sector in particular will suffer the most - craft brewers

Why craft beer is the biggest victim of the hops shortage

The average US beer uses about .02 pounds of hops in every 31 gallons, according to Businessweek, but craft brewers can use as much as 1.25 pounds. America's infatuation with beer variety has allowed craft brews to balloon up to 8% of all beers sold, which, in turn, has led to a drain on the nation's hops inventory.

"It's been a struggle for the hop industry to keep up with the new demand," the hops manager at BSG CraftBrewing told Financial Times.

Without the means or contacts to pursue forward contracts with farmers, craft brewers will eventually feel the pains of this shortage - if they haven't already. This is particularly scary when the larger, multinational beer companies, begin to circle around like scavengers, hoping to snap up small craft brewers to meet the demands of the public.

Incidentally, if and when the big beer makers of the world start to gobble up craft brewers so they can get a piece of the action, the demand for hops will increase even further. Why then don't farmers do what they can to meet the demand

Why farmers don't jump at the notion of hops

The beer boom is nowhere near its peak. Each year more and more people join the beer drinking realm, and a larger percentage of these drinkers want something more than watered-down domestics. Ever since Sierra Nevada introduced its flagship beer in 1980, Americans have been cuckoo for the bitterness and fruity flavors brought on by the mighty hop.

So shouldn't farmers be lining up like dominoes to get in on the hop action? Not necessarily.

According to the Associated Press, the initial investment for a hops farm can be as high as $250,000. And it's not like hops grow in an instant. It takes an average of 3 - 5 years for hop plants to reach full production, meaning a farmer must be willing to shell out a quarter of a million dollars and not expect any returns for half a decade.

Few farmers can afford that deal.

What can be done to avoid a long-term hops shortage?

In recent years, the nation's top hop-growing states (Oregon, Washington and Idaho) have actually seen a decline in supply, thanks to a global hops glut some years back. That was bad timing, because the demand for hops is growing; our go-to states just can't keep up with the supply. But other states, like New York, could come in and save the day.

Also, considering the cost and wait time needed to establish new hop farms, incentives - doled out by local and state municipalities - could help offset these costs.

Finally, craft brewers could do themselves a favor by creating less hoppy, lower alcohol beer (aghast!). This movement has already gained some traction. Session beers (less hoppy, lower alcohol) are popular because you can drink a few without getting too drunk. These session beers were actually quite popular before the surge of IPAs.

If craft brewers opted for a less hoppy approach to beer making, at least for a few years, it could give farmers enough time to catch up to the demand. The question is - would you be willing to swallow that not-so-bitter pill?

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