Quotulatiousness

May 15, 2014

Craft brewers face potential hop shortages

Filed under: Business, USA — Tags: , — Nicholas @ 07:55

BBC News has terrible news for craft beer fans:

Hops are hot. Their price in the US has doubled in 10 years. Some even predict the equivalent of Armageddon for beer lovers — a hops shortage.

The reason is craft beer, which has come from nowhere to claim 8% of the US beer market.

Far more hops go into craft beer than the equivalent produced by large corporate brewers — roughly six times more. The brewing revolution has triggered a shift away from bland, high-yield alpha hops to the “aroma” varieties responsible for the striking citrus notes in craft beer. It is a “double whammy” — more hops needed but they are of the varieties that are less productive.

By next year, acreage will be planted 60/40 in favour of aroma varieties, says Ann George, director of Hop Growers of America. It used to be 70/30 the other way. The hop plants take a couple of years to be productive. It’s going to be touch and go. “Craft breweries are opening faster than farmers can grow hops,” reported US online magazine Vox.

Clearly this calls for a blue-ribbon panel to recommend government solutions to the impending doom of higher prices! Let’s set up a bureaucracy to allocate the market so that all current brewers get a fair share … and of course, we must protect the companies already in the market from upstart competitors! We should have the first report in by 2016, which will allow the new organization to be set up by 2018 or so, and by 2020 the market will be fully regulated and operating smoothly under the benevolent guidance of government officials.

Or, y’know, let the market decide. Which it appears to be doing nicely — demand for more aromatic hops is up, so prices have risen to the market-clearing level. Higher prices for hops are signalling to hop producers that they need to produce more, to take advantage of the higher prices. Higher prices are also telling brewers that they need to economize in the short term or raise retail prices for the hoppiest brews to reflect the higher input costs. Knowing that a shortage is possible — signalled by higher prices now — means that brewers will adapt quickly (or, for a few less-well-managed firms, go out of business).

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