Hops: Brewers, Sales Directors talk about the hop shortage
Here are some extended interviews with brewers and marketing reps about rising hop, barley and energy costs that I was unable to put in my article this morning in our newspapers: Soaring costs force craft brewers to raise prices:
ALISON YIN/ Staff
Christian Kazakoff, 36, head brewer at Triple Rock Brewery in Berkeley, stirs a huge load of barley Friday. The cost of hops and barley, the basic ingredients in beer has been steadily rising, due to high demand from craft brewets, a shortage of growers and a poor growing season. Kazakoff, who has been brewing beer for about 10 years, looks at the need to change beer recipes as a fun challenge.
Matt Brynildson, Brewmaster, Firestone Walker Brewing Co., Paso Robles, CA. We’ve raised our prices, can’t tell you exactly how much as a result of increases in the cost of both hops and malt.
This would be the year we decide to introduce a beer with four times the hops of our other beers: Union Jack IPA. But we have the hops we need. We’ve just bottled the first release, you should see it on shelves pretty soon.
I’m already working on the next crop year and the vines haven’t even broken through the ground. I’m already signing contracts. (Historically) the big guys always have signed long-term contracts with hop growers. This always kept the prices really low; it’s pretty hard on the farmers.
Dave, who was my instructor at Seibel (Institute of Brewing Science) in Chicago, he had been a brewmaster at Huber in Monroe, WI. for 30 years. He said, When I started (as a brewer) hops were $2.50 a pound; 30 years later, they were $2.50.”
It’s no wonder the hop industry is in trouble; it’s no wonder there’s a problem. You know, the big brewers use less and less hops, because they’re more efficient. In the 10 or 12 years I’ve been brewing, I was conditioned to thinking about it backwards. I would always expect hop prices to go down and I was buying more and more hops.
Now, we’re having this massive correction. At Firestone Walker we feel fortunate. We’ve built good relationships with multiple hop brokers and farmers. We’ve got all the hops we need, but we certainly are paying more for ‘07 hops and a lot more for next year’s (2008) crop.
The good news I think is that it will be a real challenging year for brewers and brewers who are artisans will take what hops they can get and put out excellent beers. This will be the year that tests our mettle.
For us, Double Barrel Ale is 50 percent of our business. It’s predominantly made with Styrian Goldings. There was a complete crop failure in Slovenia, where the hops are grown. We’re having to test all sorts of different hops to substitute. It’s really testing our abilities to flavor match.
I see it as a challenge, an excellent opportunity to experiment with new hops. We’re excited. It’s the best of times and the worst.
Adam Lamoreaux founder, Linden Street Brewing, Oakland: Hops? It’s just crazy out there. No one knows if it’s a one year hiccup. Brewers are buying crops (hops) out to 2010.
When I first started I was buying hops for $7 a pound, not they’re going for $30 a pound for me and for $50 a pound eBay for homebrewers.
But I can’t let it affect my prices. My brewery’s small, I don’t have the costs that larger places do. I can take the hit. I self-distribute. You can’t blame brewers for raising their prices. There’s been a serious cost-of-goods bump. I’m hoping it’s just this year.
(Everyone is scrambling) I’ve heard that pretty much the New Zealand hop has already been sold. I’m actually talking to a farmer in South Africa about hops down there. Hops mature by the second summer. I’m realizing how important a relationship with the farmers are; get a contract, don’t find yourself holding an empty bag. No matter what the price is, you’re going to need hops.
Ed Chainey, Northern California Marketing Manager, Anderson Valley Brewing, Boonville, CA. Yes, we’re raising prices, officially today (Feb. 1,2008). (Suggested retail price) A buck a six pack. Almost all the other craft brewers are taking prices up in steps, some did it in January, most going up in February.
(Suggested retail:)_ $9.49 - $9.99. You’ll see a lot fo retailers selling on sale at $8.99. Of course, we won’t know actual prices until we see what retailers actually do.
There have been a lot of price increases (in raw materials) across the country and across the world. This is a worldwide issue. The price of barley malt has doubled in a year anad a half; the price of hops has gone up seven times. Those are two of the most costly ingredients of beer and packaging costs have gone up.
Ron Lindenbusch, “Beer Weasel” (AKA: Marketing director), Lagunitas Brewing, Petaluma. We got lucky. We do make big, hoppy beers and we wanted to continue making Hop Stoopid (100 IBU) as part of our regular rotation, so we did contract for a lot hops in 2008 in anticipation. We’re fine for IPA and Maximus for 2008, but 2009 is somewhat uncertain, but we should be able to lock in contracts.
Our prices are going up slighty, but not as much as other brands. Not sure of the retail impact, but our suggested retail is going to be $7.49 up to $7.99 on Lagunitas Pils, on IPA, $7.99
What’s ahead? That’s all the price increases we’re going to do for 2008. We’re pretty well contracted out in advance for our hops as well as our barley. Our barley prices are up 80 percent or so and hops up 400 percent. But hops aren’t the big ingredient cost increase, the big ingredient cost is grain and the real problem is the supply (of barley) is not there.
(But with both hops and barley) This is a long-term problem of declining supply. We hit a wall this year; there’s a very short supply (of hops and barley). Anheuser-Busch took a couple of (long-term, contract) positions with barley growers. Their needs are large and they’re pushing their speciality brands.
But the problem’s more than the grain or hops. There’s also glass. Hurricane Katrina destroyed a lot of natural gas plants along the Gulf and natural gas prices have gone throught the roof. Gas fires a glass plant, so the cost of glass (for bottles) has been pretty significantly impacted. There’s been a huge incrase in costs. We’ve tried to absorb the cost as much as possible but…
We’re going to increase production; there are German engineers here now putting in our new 80 barrel brewhouse – made by Rolec, Bavaria. They also put in a new brewhouse for Victory (Downingtown, PA.) and Stone (San Marcos, CA.). We’re the third.
Richard Norgrove, co-founder, Bear Republic, Healdsburg, Cloverdale. With hops going up anywhere from 100 to 400 percent depending on the variety, we’ve locked in our 2008 prices and now are looking at the following year. We don’t think prices are going to come down, particularly on the craft side.
We raised prices Jan. 1. (But there are many factors) Wholesalers have their own costs to consider and may add on to our increase’ the retailers do the same. The whole industry’s been rocked by price increases.
(Has there been any effect of the price increases on sales?)
In some markets we’ve taken a hit. It’s like gas prices, when they go up, people drive less. But overall, the retail orders in January and February continue to increase. I would say in our stable market — Northern and Southern California, we’ve seen pretty steady, continuing growth.
One positive thing, craft brewers have benefitted by the exchange rate (falling dollar versus the euro and other foreign currencies). Imports are more expensive now.
Christian Kazakoff, head brewer, Triple Rock Brewery, Berkeley. I’m not even thinking of making a barley wine (which requires a lot of malted barley). I need to focus on what I have on tap and keep the hop content the same. Maybe at the end of the year, I might make something with a lot of hops.
But I’ve got a feeling my one-off seasonals will be more on the malty side. I’m thinking about this coffee/chocolate/imperial stout.
The situation is sad. There aren’t enough hop growers, there are poor growing conditions, a lot of hops I normally use, I’m struggling to find. For one, I may not be able to set Simcoes, which I use a lot because it’s a good aromatic. Some others are also hard to get and I’ll have to figure out how to cope.
The other thing, the blessing in disguise in the hop crisis. It forces us to be artisans. Another thing, it’s not just the hops; malt prices have skyrocketed too.
Raising prices? John Martin (brewpub owner) raised prices to $4.25 a glass, seasonals $4.50 last fall.