Online hop prices..

Ok I've ordered from several online vendors for recipe kits or just ingredients and it seems lately the more I learn about ingredients the more I feel some of the vendors are overpricing the hops. I mean we all can buy hops and malt in bulk, grain for like $.70 a lb and hops for like $.65-$.80 per ounce. So shouldn't a lb of grain cost about as much as a oz of hops? Not the case, grains seems to run $1-$1.20 a lb and hops average at $2.99 a oz, sure there are specials but this seems to be the average for the most part. I think I'm going to get a hopsdirect order for some Cascade and Saaz at least.

A question to ask is how much grain and how much hops does your LHBS buy? Where will his greater discount be? Next, packaging in small quantities like an ounce vs. a pound just costs more in materials, labor, and merchandising. When you factor in all the variables, the markup is likely fairly close. It's something of the nature of retail.

You are surprised that retailers are charging higher than wholesale prices?

I realize that they're going to be higher than wholesale but take this into account.

A retailer should be able to get base malt for $35 or so for 50lb if they get a decent sized shipment. Say they sell it for $1.10 a lb for a 57% markup.

I also averaged the hopsdirect.com prices for pellet hops which is about $14.00 including 25% shipping. So that's a $.87 per oz average. Which means that your typical store or online site that sells them for $2.99 an oz is marking them up 243%. Like I said its seems a bit excessive.

zanemoseley said:

I realize that they're going to be higher than wholesale but take this into account.

A retailer should be able to get base malt for $35 or so for 50lb if they get a decent sized shipment. Say they sell it for $1.10 a lb for a 57% markup.

I also averaged the hopsdirect.com prices for pellet hops which is about $14.00 including 25% shipping. So that's a $.87 per oz average. Which means that your typical store or online site that sells them for $2.99 an oz is marking them up 243%. Like I said its seems a bit excessive.

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I actually agree.... its a bit excessive in some cases, and I actually believe that those sites (not nessecarily stores) that markup hops to 3$ an ounce are just simply not serious enough about their business for my money. This signals to me that they are lazy, and are waiting for the next 'sucker' who thinks they need to buy their hops from them. These hops are probably not even very fresh. My 2cents only, of course.

I will give my money to more serious businesses, like hopsdirect among others.

Are you factoring in the cost of mylar bags and the work associated with divvying up/sealing all the individual portions from that bulk pack? Thats gotta eat up a decent amount of margin on its on, I bought regular vacuum bags a week or two ago and almost crapped when I saw the price.

zanemoseley said:

I realize that they're going to be higher than wholesale but take this into account.

A retailer should be able to get base malt for $35 or so for 50lb if they get a decent sized shipment. Say they sell it for $1.10 a lb for a 57% markup.

I also averaged the hopsdirect.com prices for pellet hops which is about $14.00 including 25% shipping. So that's a $.87 per oz average. Which means that your typical store or online site that sells them for $2.99 an oz is marking them up 243%. Like I said its seems a bit excessive.

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You do not know the situation. You are incorrect. You can buy hops for significantly less than the stores paid for the hops they have now.

Most stores are way overstocked on hops that were purchased when the hops were a lot more expensive. No one is gouging, trust me.

Buy your hops where you get the best price. Refrain from speculation on what any store paid for anything.

Most stores also signed contracts for hops for years to come at those higher prices. You just don't know the situation.

I currently have 5,500 pounds of hops I paid too much for.

The prices you want to see at homebrew stores right now would be below their cost.

Forrest

Its true that there is labor and material involved in repackaging hops into 1oz bags. I guarantee that if you get a wholesale supplier for you packaging products you can get the bags at a better price.

You could also argue that most recipes use an average of like 10lb of grain where most recipes average only about 2oz of hops so they are trying to make more off the hops to compensate for the lower quantity. The flip side to this is that I think a certain percent markup or margin should be used across the board not a strategy saying I want to make 33% off the grain 33% off the hops and 33% off the yeast.

Thanks for the insight Forrest, my error in gauging off of current prices instead of those bought during the shortage. I can see where moving 5500lb of hops takes some time. A lot of the lower hop "sale" prices are on Cascades and other quick moving hops that you guys have probably flushed old inventory.

No one in the homebrew industy is getting rich. Not even the big dogs. The big dogs are big dogs because they make far less margin and that is why you shop there.

Forrest

Except for Blichmann maybe

zanemoseley said:

Thanks for the insight Forrest, my error in gauging off of current prices instead of those bought during the shortage. I can see where moving 5500lb of hops takes some time. A lot of the lower hop "sale" prices are on Cascades and other quick moving hops that you guys have probably flushed old inventory.

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And many stores locked in the high prices for several years. So you get the benefit of buying the hops right now and many stores cant afford to buy hops even if the price is lower because they already have the hops coming on the next crop at highly inflated prices. So they cant buy the cheaper hops if they wanted to. They have to buy the high priced hops and unfortunately sell them at cost, which you would deem too expensive so you buy somewhere else so their hops move even slower.

Forrest

So do the stores pre-purchase the hops for years in advance in an attempt to avoid further price increases or is it simply required to be a large vendor of some farms/distributors?

Not berating. Just explaining that stores will have to sell their hops at or below their cost in order for people to buy them now. It is not really a situation where people are gouging.

It really wasnt poor decision making on contracts. We were told that there will not be any hops at all for 2-3 years and if you don't buy now there will not be any to buy. So stores invested. Expensive hops are better than no hops. You go out of business without hops.

Then once everyone was locked in they say sorry we were wrong we have a lot of hops and the price is going down rapidly and lower every year after that. Sorry you bought so many hops at the higher price.

We got screwed. So buy your hops at the best price you can but help a LHBS out if they have some hops on sale to move them.

Forrest

Wow, kinda makes the hop farms look like the bad guys. Perhaps if they valued their customers (you) that they would offer some sort of refund or at least future discounts to compensate for their poor speculation.

I think of it like this, Ed, Forrest, and Tom and others offer their expertise like a brick and mortar store, who lend knowledge and an experience. They help out with your questions, get things you need if they aren't in stock, and offer a complete solution at one place. If you want to bypass that and pick up bulk stuff piecemeal, then by all means, do so. But they are here to support the brewing community. We all should act accordingly.

Most industries give the best price to the stores because they buy in huge volumes. The hop industry sells to anyone for the same price. No store is going to be able to match or beat Hops Direct price because that is the price the stores pay for hops if they buy them now. Unfortunately, on many varieties they paid 2-3 times that or more and will for a few years.

Does anyone want to buy Willamette pellet hops at my cost? Only $23.85 a pound before the label and bag, labor, shipping etc. (its $6.75 a pound at Hops Direct). I only have 300 pounds left.

Forrest

P.S. Just a reality check, not really complaining. It is what it is. No other store is going to tell you these things. I didn't want you guys thinking stores are stickin' it to ya. They are just trying to stay in business.

I'll try to get some other stuff to get and take some of those Willy's off your hands.

The hop prices were so good this fall that I bought another 9 lbs to add to the 3lbs already in my freezer. Im all set for a while on hops. I also bought 200lbs of base malt in group buys. I do, however routinely overpay for specialty malts for beer I want to brew more spur of the moment. I consider this a matter of convenience and am happy to pay for it. Besides, I like to support a local if its not too outrageous.

Hops are the only thing I pay too much for at my LHBS. I did some side by sides and was surprised how competitive they are. They offer a "Grain Card" that allows you to prebuy a 50lb bag and get what you want when you need it.

I just got home from my local beer store that also carries homebrew supplies....They have a 3 pound bag of hops that they have marked at $135.99... its been there since I started going about a year ago or so...even there 2 ounce packs are marked at $12.99...needless to say I only go there for there great selection of worldwide beers...

Outrageous is subjective. If a store is charging more they paid more. There are a lot of ways to never use a homebrew store and save some money. The stores are feeling the pinch.

I would contend that you are not overpaying at a LHBS when you routinely buy at wholesale prices which are at or below what the store paid. Your group buy on grain was less expensive than what the store in your area paid for the same grain.

It is not that they are charging too much it is that they places you are buying at charge the same to stores as well as the consumer. Stores cannot compete with their own cost.

I am not saying you shouldn't buy at the best price you can but homebrew stores are not gouging they are trying to stay in business.

Forrest

freebd said:

I just got home from my local beer store that also carries homebrew supplies....They have a 3 pound bag of hops that they have marked at $135.99... its been there since I started going about a year ago or so...even there 2 ounce packs are marked at $12.99...needless to say I only go there for there great selection of worldwide beers...

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Are you talking about Hy-vee? I think I need to open a store in your area. I am from Iowa City originally.

Forrest

Austinhomebrew said:

Are you talking about Hy-vee? I think I need to open a store in your area. I am from Iowa City originally.

Forrest

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no...I am talking about Benz Beverage Depot in Cedar Rapids...hy-vee only charges 2.50 -3.50 per ounce on hops and most grains are just 1.99 per one pound bag...I think you need to Open a store in my area too!!!

scott

By "overpay" I meant in comparison to prices available to me from online suppliers. When shopping online I need to plan ahead to make the shipping worth it, and then wait for delivery. Most of the local prices are reasonable considering the lack of shipping and that its immediately available. I don't feel that they gouge at all.

I wish I was lucky enough to have a LHBS but don't that I know of. I prefer internet shopping especially with all the good vendors, I've ordered from Austin, Brewmasters and MW Supply and have been happy with all of them. I was going to go by Rebel in Nashville after a family event but they close a 1pm on Saturdays geez give me a break. Its way to far to drive any day.

Austinhomebrew said:

And many stores locked in the high prices for several years. So you get the benefit of buying the hops right now and many stores cant afford to buy hops even if the price is lower because they already have the hops coming on the next crop at highly inflated prices. So they cant buy the cheaper hops if they wanted to. They have to buy the high priced hops and unfortunately sell them at cost, which you would deem too expensive so you buy somewhere else so their hops move even slower.

Forrest

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Forrest, does this have anything to do with the Futures Markets, or is it just a contractual obligation thing?

Contractual obligations.

Forrest

I've run a couple businesses and believe that what you pay for something and what you sell it for are completely unrelated. The end price is determined by the market, and what it will bear. Sometimes you make a bundle, sometimes you break even, and sometimes you take it in the shorts. That's business.

HomerJR said:

I've run a couple businesses and believe that what you pay for something and what you sell it for are completely unrelated. The end price is determined by the market, and what it will bear. Sometimes you make a bundle, sometimes you break even, and sometimes you take it in the shorts. That's business.

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Pretty much. As much as we can complain about the prices, hop farms are a commodity like any other (with no real secondary market no less). The hop industry was overproducing in the early 90's-early 00's. They had so much overstock that they were having to sell at or below cost. Many farms converted farmland to more profitable ventures overtime or they'd go under.

So then we hit a shortage with poor worldwide yields (60% of the US Crop is exported), a warehouse fire which destroyed 4% of the US crop, low dollar exchange rates increasing foreign buyers and everyone worldwide in a panic to not run out of hops which drove prices through the roof and many got the short end of the stick with expensive several year contracts.

A great example of how just one change can affect the market is just looking at the price of Willamette. Who buys 95% of the variety? Budweiser. When InBev took over they decided they were going to streamline and change the future contract. Bud contracted so there was an extra 12-18 month carryover in the warehouses in case something went wrong. When InBev came in, that changed to 3-6 month. Now all the Yakima farmers have tons of excess, some didn't even harvest it as it'd be cheaper not to. The ones that did are now selling it below cost to get rid of it.

Great hearing from a retailer on this subject.
Thanks Forrest.
I have bought from Hops Direct mainly for the varieties I use the most.
I have no problem paying my LHBS or other retailers $3 to $4 bucks an ounce when I need it. I feel the value they bring me in customer support and guidence is worth the premium.

Go with hopsdirect all the way!