any truth to the amarillo hop rumor (AB bought amarillo hop farm)

Saw a post on twitter by a brewer at troegs:
"Yikes! No open market amarillo hops after 2014? Word on the street is that AB bought the farm's contract."

Could be that they worked some type of deal to buy any 'spot' Amarillo left after all the contracts are filled. If you can't beat 'em, take their hops!

What would they want with their hops?

BWN said:

What would they want with their hops?

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Maybe an attempt to supply the their 'crafty' acquisitions, while simultaneously depriving the competition.

signpost, right on! They'll do anything now that the 'movement' has taken so much wind out of their sails (sales!). I don't want use the word 'desperate' but they have investors to satisfy and it's a great feeling to be on the "winning team" for once in my life!!

Something doesn't seem right.

Best as I can tell there hasn't been much in the way of "excess inventory" in the Amarillo market, which should have supported pretty good prices at the farm. Big contracts are usually for much smaller $/unit than what ends up in the retail channels at least - and probably at the craft brew volume as well.

I don't see why the farm would go for that...

Cheers!

A offer you can't refuse?

If they did, they will up the production and more for everyone.

Back during the year of the 'shortage', there really wasn't one ~ it was actually self imposed. Many brewers became nervous after hearing rumors and bought up all the spot hops (the ones left over after all the contracts are filled). This equated to no hops left for those brewers who were starting new breweries. They were told that if they wanted hops, they'd have to get contracted for the coming years and their price would be 'what the market commanded' at that time which was going UP because that's what the market dictated.

So now, the current contract price is say, $10 or more/pound (compared to 5 or 6). In response, farmers planted additional acres because the extra couple dollars/pound made it worth while for them. Those newly planted first year hops normally only produce a fraction of what the mature plants yield but because of a great growing season, the new acreage did very well and there was a bunch left over after all the contracts were filled. What was left over was selling for a LOT less than what those new contracts were paying which pissed a lot of folks off. To make matters worse, keep in mind, that there were a bunch of brewers sitting on stocks of hops that were 'hoarded' (remember the hop crisis) which sent 'spot' prices even lower. So now the guys contracted at 10+/pound are trying to get out of their contracts to be able to buy the spot hops which are less than half of what they're locked in at. The growers then ripped a bunch of those newly planted acres out and things have been pretty rocky ever since, especially with AB-Inbev walking away from all the Willamette contracts they had with the farmers in Oregon.

So, I don't think it would be that far-fetched to imagine some sort of deal being made that certain spot hops would be sold at something of secondary contract price which would possibly be less than the normal contract price but better than spot prices. Business is what it is so just be thankful that we can grow what we can to take that variable out of the equation.

ps: the above isn't gospel but the best that I could put together from talking to different folks.

As a hop grower, if a brewery came to me and said, "I'll give you $AA/lb + $BBB,BBB/year to sell me your entire crop..." I would consider taking that offer. It takes a lot of the variability out of farming. Its the same reason grain farmers put up big grain bins. They can sit on their grain waiting for prices to improve.

As a beer drinker, that would suck. It would essentially kill that hop. Amarillo is a fine hop and would have a following regardless of who brews with it. But a lot of the "prestige" came because brewers are featuring the hop in their prize/special formulation/brewing competition beers. When you want to impress the boss when he comes over for dinner, you don't serve mac n' cheese. You pick up a roast and whip out the fine (or in my case, matching) silverware.

Same with Amarillo. Of course the hop is awesome when its featured in awesome beers. With all the craft brewers featuring the hop, it builds up the desire.

Now imagine Goose Island and the other handful of "craft" breweries that AB owns are the only ones to offer beers with Amarillo. They will offer it in every beer they have but all the other craft brewers will latch onto the next big hop. Soon the mystique will be gone and they will have to chase the new big hop.

I guess I don't really care because you can never find it anyways so I never use it

I heard they bought up all the simcoe and summit too. No more hops forever.

AZ_IPA said:

I heard they bought up all the simcoe and summit too. No more hops forever.

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That's ok, I'm training a herd of cats to pee on a pine tree forest. I'll dry hop with the bark. Bam, instant Simcoe!

I doubt there is much to this rumor, and even if it were true there are plenty of hops that can be used as substitutions for Amarillo. It's a great hop but I don't think BMC is going to purchase the hop farm just to deprive the "craft" beer market that they're not really focused on anyway.

Interesting stuff.

The financial side of the forward & spot markets is really fascinating, mainly b/c of the volatility. In theory it's no different than any other commodity, but some of the nuances are extremely fascinating (small farms, new farms, shifting/growing demand, large buyers & small buyers, discrete nature of harvest, etc)...

If I were writing a thesis, I'd have my topic.

GVH_Dan said:

As a hop grower, if a brewery came to me and said, "I'll give you $AA/lb + $BBB,BBB/year to sell me your entire crop..." I would consider taking that offer. It takes a lot of the variability out of farming. It

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Agreed. Assuming the buyer doesn't suddenly back out and/or pay you to stop growing...

TyTanium said:

Agreed. Assuming the buyer doesn't suddenly back out and/or pay you to stop growing...

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Back out...that's why you sign a contract.

Stop growing...why not? If they have contracted to purchase the entire crop, they could throw it out or just tell the grower to stop. Its done in the fruit-for-baby-food industry all the time. Check out the ag papers of the northern part of the MI lower peninsula. Most contracts have a clause for the amount to be paid if the grower is told to stop growing or dump the produce.

GVH_Dan said:

Back out...that's why you sign a contract.

Stop growing...why not? If they have contracted to purchase the entire crop, they could throw it out or just tell the grower to stop. Its done in the fruit-for-baby-food industry all the time. Check out the ag papers of the northern part of the MI lower peninsula. Most contracts have a clause for the amount to be paid if the grower is told to stop growing or dump the produce.

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Just a tongue-in-cheek reference to AB/Willamette thing.

Of course it'd be good to get paid to do nothing. And ideally the contract is solid enough to prevent backing out, but it still happens.

Ah, but the difference there is they didn't pay the growers to stop growing...they just stopped paying/contracting with the growers for that variety. There's a big difference.

Maybe i missed something, or else just don't understand the hop market, but is there only one farm that produces amarillo?

doesn't Stan Hieronymus' new book on hops state that there are now 3 farms that grow amarillo? or am i thinking of another hop?

they mentioned it last night on the BN's Sunday Session.

TyTanium said:

Interesting stuff.

The financial side of the forward & spot markets is really fascinating, mainly b/c of the volatility. In theory it's no different than any other commodity, but some of the nuances are extremely fascinating (small farms, new farms, shifting/growing demand, large buyers & small buyers, discrete nature of harvest, etc)...

If I were writing a thesis, I'd have my topic.

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I actually wrote a paper on this for my Econ class

Mosaic, El Dorado, and other very interesting hops are just starting to come into play. Amarillo isn't the only interesting hop in town.

First Big Oil, Big Tobacco, and now Big Hop. But Big Hop sounds kind of friendly. Maybe I'm missing something, but if someone said you couldn't get amarillo, I'd be like "oh well." This is exactly what happens with proprietary ANYTHING. You get screwed.

sweetcell said:

doesn't Stan Hieronymus' new book on hops state that there are now 3 farms that grow amarillo? or am i thinking of another hop?

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Yup - I think he licensed it to other farms. Or maybe that was El Dorado.

Awesome read, btw. Really enjoyed the book.

Goyagon said:

I actually wrote a paper on this for my Econ class

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Care to share any of it? No pressure at all...but you'd have some attentive readers here

highgravitybacon said:

First Big Oil, Big Tobacco, and now Big Hop. But Big Hop sounds kind of friendly. Maybe I'm missing something, but if someone said you couldn't get amarillo, I'd be like "oh well." This is exactly what happens with proprietary ANYTHING. You get screwed.

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I think the beauty of hop growing is that it's a collection of small farms. HopUnion kinda makes me nervous if they get top big, but I like a lot of what I see from the hop farming community.

There's a lot of growers working directly with brewers. Very cool. As you said, if they can't get something, they work with the grower to find something else.

Ammarillo is a patented variety. I believe you can find it by searching for: VGXP01. You will see its held by the Gamache family. So they can decide who grows it and how much. I have no idea if its held to one farm or not, but they would be the ones to decide.

TyTanium said:

Yup - I think he licensed it to other farms. Or maybe that was El Dorado.

Awesome read, btw. Really enjoyed the book.

Care to share any of it? No pressure at all...but you'd have some attentive readers here

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Haha it was nothing big I got most of my research from here. I basically described the up and down cycle of prices supply and demand and how it effects the types of popular craft beer styles, just the basics I didn't do any independent research.

Proprietary hops:
Ahtanum
Amarillo
Citra
El Dorado
Mosaic
Palisade
Simcoe
Warrior

And if you look at prices, these tend to be the most expensive hops on the market.

As for the OP, any truth to this? I searched google for Anheuser Busch Amarillo and the only things that came up were related to a location, not a hop.

I'm pretty sure there won't be any big announcement confirming it. So we'll just have to wait to see if they are even more scarce next year, if that's possible.

I got a kg from my HBS last week - expensive at 45$ or so! Said a local microbrewery left them 5kg of it. Smells great, can't wait to brew a DIPA with it. The guy said I was super lucky but Ibeg to differ at that price!

I think we're all losing sight of what's important here. Which is that Twitter rumors are stupid and should never ever be believed until verified by a reputable source.

You know what I've always wondered regarding these proprietary hops and the farms that grow them?

Obviously I'm not condoning or trying to give any ideas here, but how has nobody leaked rhizomes onto the market? All it would take is a flashlight and a shovel. And maybe a few IPAs.. :rockin:

Looper said:

You know what I've always wondered regarding these proprietary hops and the farms that grow them?

Obviously I'm not condoning or trying to give any ideas here, but how has nobody leaked rhizomes onto the market? All it would take is a flashlight and a shovel. And maybe a few IPAs.. :rockin:

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My friend, don’t forget the need to lawyer up if someone did such a thing. Brewers could begin to fight the cost of these patented hops if they just start using substitutes.

There are tales of brewers finding seeds in their whole cones package. They wouldn't be a clone like from a rhizome but it would get you darn close. There's the chance of it being even better!

Unfortunately, if these tales are true, either the brewer wasn't a very skilled hop grower or they are just as stingy with their rhizomes.

There are a few guys in Texas growing Amarillo hops.

bleme said:

There are tales of brewers finding seeds in their whole cones package. They wouldn't be a clone like from a rhizome but it would get you darn close. There's the chance of it being even better!

Unfortunately, if these tales are true, either the brewer wasn't a very skilled hop grower or they are just as stingy with their rhizomes.

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That's crazy! Ill keep an eye out for them haha.

Wouldn't surprise me though, if they pasteurized the hops in order to sterilize the DNA matter from being propagated.. If that's even possible

hop cones are kiln dried, i would expect that process to kill off the seeds.

only way that i've heard that will work (if you're lucky) is to order fresh (green) hops in the fall, hope that there is a viable piece of stalk in there, root that, then keep it going all winter until you can move it outside - and hope the damn thing survives all the stress. certainly not an easy thing to do.

and yes, if the patent owners hear that you have some of their protected intellectual property you can expect a threatening letter from their lawyers, regardless of how you obtained the plant material.