The hop shortage

[RoaringBrewer]

Personally, I'm with brewtus. Hops would either have to reach like $6/oz or more before I'd even consider using herbs and spices in their place. And even then...

+ One Million. I'm with these guys...

Some hop varieties may be unavailable until next year (from homebrewshops - sure for the right amount of $ you can buy anything though) and others may cost an extra buck per ounce.

It's not the end of the world...

 

[cubbies]

It's been said already, but I am gong to reiterate. There is no reason (at least not yet) to be going that route. If you want to experiement for the fun of it, then go ahead, but you shouldnt be doing it because of a hop shortage. Most hops at Austin Homebrew were around 1.39-1.69 and now are 1.99. Really not that big of a deal. And it is the same at other brewstores too. Yes, some styles are going to be out of stock. That is the way it is going to be for a little while. But there are some very good hops still available. No Amarillo, try Columbus. No Hallertua, try Spalt. the list goes on and on. You never know, you may end up liking one more than the one you were originally trying to use. As a matter of fact, Columbus is probably my favorite high AA hop. If you need a high AA hop, I would definitely recommend this hop.

 

[Cheesefood]

The good news is that there's really no difference in hops. They all taste just about the same.

 

[the_bird]

The good news is that there's really no difference in hops. They all taste just about the same.

Vanilla extract, on the other hand - you've got to be REAL careful how you source that stuff!

 

[Seabee John]

A little stroll down memory lane from the Summer of 2006 in the Hallertau region of Germany.

Enjoy!

I plan to grow my own hops and I'll look to find other brewers in my area interested in bulk grain purchases.

ED, I know you grow your own (hops that is) and I was wondering where and how can a guy get the materials to grow his own hops?... I've seen plenty of advice on how it's done here (including your post on a Texas Hop Garden) Anyway I see hop seeds on ebay from time to time but who knows what species they are... where do I go to get what I need and how do I know it's the right stuff?

 

[Seabee John]

Ah.. Um.. http://www.freshops.com/garden.html

Got it.

 

[gonzoflick]

Heres what I just picked up at my LHBS and what I paid. It was expensive, but I should be set for at least a few months all hops are pellets

4oz Cascade $6.40
4oz Kent Goldings $6.40
4oz Centennial $6.40
3oz Hallertauer $4.80
2oz Willamette $3.20
2oz Saaz $3.20
3oz Chinook $4.80
1oz Mt. Hood $1.60
3oz Northern Brewer $4.80
4oz Fuggles $6.40
3oz Columbus $4.80
1oz Amarillo $2.40
1oz Magnum $2.40

Total spent $57.60 Hope to make some good beer though

 

[Hopleaf]

I bought half a pound of Cascade today for $3/oz...

wish I bought a bunch more earlier in the year

LHBS said they'd prolly run out in Feb.

 

[gonzoflick]

$3/oz OUCH. thats $48/lb Jesus man I hope that was a typo

 

[jezter6]

Nope. I picked up pellets as my LHBS last night at $2.99/oz pellets.

 

[gonzoflick]

Freshops is at $1.60/oz. Why are you all paying $3? Just for convenience and no shipping charges?

 

[Cheesefood]

Nope. I picked up pellets as my LHBS last night at $2.99/oz pellets.

I've got $2.50 ounces of Cascade whole leafs I'll sell you all day long. If you need Hallertau, I can do $3.00 per ounce with shipping included.

 

[jezter6]

I've got $2.50 ounces of Cascade whole leafs I'll sell you all day long. If you need Hallertau, I can do $3.00 per ounce with shipping included.

Heh, let the profiteering commence!!

I didn't really realize it until I got home and wondered why my bill was $36 for a 1.072 recipe. I looked that the receipt and went 'WOWZA!'

I got it for a recipe I'm brewing tomorrow and didn't think to buy online because I support my LHBS with as much as I can afford to so he can stay in business.

I see some stuff cheaper, and I'm working on it now for the next month or two of brews. However, my standard hops list is Fugs, EKGs, Hallertauer, and Tettnanger. Sadly, those are some hard to find varieties.

I don't care much for the high alpha stuff anyways, so not being able to find the 8% and up hops doesn't hurt me too bad. I just like my german and irish ales.

 

[adamk222]

Heh, let the profiteering commence!!

I didn't really realize it until I got home and wondered why my bill was $36 for a 1.072 recipe. I looked that the receipt and went 'WOWZA!'

I got it for a recipe I'm brewing tomorrow and didn't think to buy online because I support my LHBS with as much as I can afford to so he can stay in business.

I see some stuff cheaper, and I'm working on it now for the next month or two of brews. However, my standard hops list is Fugs, EKGs, Hallertauer, and Tettnanger. Sadly, those are some hard to find varieties.

I don't care much for the high alpha stuff anyways, so not being able to find the 8% and up hops doesn't hurt me too bad. I just like my german and irish ales.

santiam is in stock at more beer and is almost identical to tettnanger

 

[McCall St. Brewer]

I'm a bit confused about this whole hop shortage deal.

Here's what I think I know:

1. Hops were over-abundant for a number of years so growers have decided to produce less.
2. 2007 was a bad year for growing hops and some crops were actually destroyed by weather.
3. Most online homebrew suppliers seem to be out of many popular varieties (particularly Cascade, Centennial, Hallertaur) and have raised prices substantially on the varieties they still have.
4. The outlook for hop supplies for the next two years looks terrible.

Here is what I don't know:

Other than that growers are producing less and weather destroyed some crops, how did things get so bad so quickly? If prices stay high will growers increase their acreage so that this becomes a temporary shortage?

 

[the_bird]

What I'm not sure of is how much the current shortages is simply magnified by being essentially between seasons. Like, come a month's time, when all the '07 crop is for sale, will many of these varities be available again, albeit at a higher cost? I never paid enough attention last year to know whether there's a natural seasonal element at work, which may be magnifying the fundamental problems in the hop sector.

 

[-Dan-]

3. Most online homebrew suppliers seem to be out of many popular varieties (particularly Cascade, Centennial, Hallertaur) and have raised prices substantially on the varieties they still have.

100% ACK! I just wanted to order gain and hops and was "fairly" shocked about the prices compared to those about 1 1/2 months ago. I'm not even talking about the 2007 harvest yet.

 

[Cheesefood]

I'm a bit confused about this whole hop shortage deal.

Here is what I don't know:

Other than that growers are producing less and weather destroyed some crops, how did things get so bad so quickly? If prices stay high will growers increase their acreage so that this becomes a temporary shortage?

Things got so bad because corn prices are so good. Ethanol is way raising up the demand for corn. Where my inlaws live, land that went for $2,000 per acrea a few years ago is going over $5k per acre now. Grain and Hops growers stand to make a s-load more by growing corn.

The big breweries own their hop farms so they won't care too much about the commodity hops market. It's the little guys who depend on farmers producing hops that will worry the most.

Also, there was a big warehouse fire last year that pwned the hops supply.

 

[Beerthoven]

What I'm not sure of is how much the current shortages is simply magnified by being essentially between seasons. Like, come a month's time, when all the '07 crop is for sale, will many of these varities be available again, albeit at a higher cost? I never paid enough attention last year to know whether there's a natural seasonal element at work, which may be magnifying the fundamental problems in the hop sector.

I was thinking the same thing.

In a month or two we'll see greater availability but at higher prices, right?

 

[the_bird]

I was thinking the same thing.

In a month or two, we'll see greater availability but at higher prices, right?

I think so... my impression has been that prices have been historically really low because they WAS a glut that's just now really being worked off, so the overall price level should be higher. But, the specific unavailability of hops pretty much across the board at the major suppliers; I suspect that will not be the case in a months' time, although certain varieties will not be available (probably pre-committed to major breweries). It sounds like NB, at least, will be actively bringing in different types of hops as quasi-replacements. So, you might not be able to brew an Amarillo-pale ale, but there should be something else available to experiment with.

 

[olllllo]

This is how it all went down:

[youtube]RAXdie_gifI[/youtube]

 

[adx]

Some of the shortage of US variaties exists because there was a huge warehouse fire in Yakima last winter. That wiped out a good chunk of the yield from the Yakima Valley. Just like most things in ecenomics it's a series of events. Soon the market will level out.

 

[Cheesefood]

What I'm not sure of is how much the current shortages is simply magnified by being essentially between seasons. Like, come a month's time, when all the '07 crop is for sale, will many of these varities be available again, albeit at a higher cost? I never paid enough attention last year to know whether there's a natural seasonal element at work, which may be magnifying the fundamental problems in the hop sector.

Hold it one second, buckaroo. Aren't you supposed to be a financial advisor? Are you asking how to speculate the commodities market?

 

[the_bird]

There's a lot of momentum in the hops sector right now. Go long Cascade futures, put a stop in at the 10-day moving average. Got long EKG, short Fuggles, leverage that MF up 20x.

Damn, think I can run a hedge fund speculating in hops futures? I'll diversify with bets on the spread between Maris Otter and domestic 2-row.

 

[ohiobrewtus]

Cheese nailed it above. Farmers are getting paid to grow corn for E85. E85, which, as of about 2 hours ago was only 10 cents a gallon cheaper than regular unleaded here.

 

[westerntrout]

and it is 10 cents cheaper only due to the huge subsidy that we are paying through the fed. the unfortunate byproduct is a steep rise in food grain prices that will inevitably price many of the worlds poor out of the market with the result that the starving 3rd world poor will be on the head of gore and his myopic and misleading movie. it won't be portrayed as such though, naturally

 

[kappclark]

Growers need fertilizer....corn growers use potash.... check out the pricing for the largest potash producer, based in Canada - ticker symbol = POT (!)

 

[Bobby_M]

You can say that for all the agg stocks.. MOS POT TNH CF what a wild ride.

 

[david_42]

Corn land and hop land are not the same, so that has nothing to do with it. Almost all US hops are grown in areas (OR, WA, ID) that have never been used for corn, as they are too dry. Hops are drip irrigated on most farms because we only get 1-2 inches of rain in the summer. Corn needs that much a week.

There was a massive hop glut around 1999. Almost 30% of the crop wasn't sold that year. Hop acreage is down by 1/3 since that time period and there was still excess in 2005. Barring more bad crops, things should get better in 2008-9.

 

[jdoiv]

Part of it was that there was a glut of pelletized hops from over 3 years ago. Hop prices fell and growers either got out of the market or scaled back. Fast forward to today and the back stock of pellets has shrunk, you have various environmental factors (fire, hail storms, etc.) and suddenly the market is tighter. Still a big part of it is that the 2007 crop is still in processing and isn't shipping yet. Most hops are turned into pellets as they keep longer. The pellet processors are working on this years crop and should have it processed by the end of December, first of January. You should see prices recede as those inventories come to market, but I wouldn't bet on seeing drastically lower prices until mid 2008 as everyone will keep their prices inflated until they see how much demand there is and what they need to move out of their store rooms.

I say relax, don't worry and don't buy in bulk right now unless you absolutely have to. Prices will come back down and more items will become available. Also, get used to the idea of making some substitutions as some varieties that were hit with environmental factors (Styrian Goldings) will be in short demand regardless.

 

[Professor Frink]

Great headline on fark.com today for this story:

Hops and Barley prices take massive spike, beer prices likely to hit $10 a six pack. Thats hops, barley, and beer, so Bud drinkers can relax

http://seattletimes.nwsource.com/html/businesstechnology/2004004989_webbeershort09.html

 

[nicksteck]

our local news just ran a story on it

kare11.com i think the name was something like bitter beer

 

[rflem550]

I saw a news special on the hop and grain shortage yesterday where they interviewed workers at two local breweries. One brewer at Duck Rabbit in Farmville, NC state he expected to see prices in the stores and bars increase 10-20% in 2008. A brewmaster at Ham's in Greenville, NC said he was paying about $3.50/lb for hops and now he was paying $11/lb (if he could even get any).

 

[Jamo99]

My local shop is rationing their hops for the next year. 1 oz of hops per lb of extract or 2 lb of grains. I haven't asked what they have stored up, but I haven't been disappointed yet. I think that if you aren't able to find a specific variety, you can probably find a reasonable substitution.

 

[RangerG]

A couple of mechanics that I know tell me that unless you have an older, less sophisticated vehicle, that at least in here in Florida (because of condensation) that burning ehanol would be a bad idea for your car in the long run. Don't buy or encourage ethanol use if you guys don't like what it's doing.

Also, as hop prices rise, that should encourage new entries into that market - until there's anoter glut. There will likely always be hops available, just cost more. Just think of some other luxury good that you could live without and what you really need: roof over head, clothes on back, food on table / beer (like a food), and something to make wife tolerate beer.

Like the man said, I can always try to clone Bud and such by using just a pinch of old nasty dried-to-dust pellets, a dollop of malt syrup, and some rice.

I'm trying out a Hercules Double IPA, it's great, but if I'm willing to pay $7 for a 22oz bottle of 9.1% highly-hoped beer (I'm a returning brewer and have 6 batches in ferment but no drinky yet), then I'll probably just bend over and pay more for hops. Hey maybe we can get Ted Kennedy to help us with this beer dilemma?

 

[b33rm3]

sounds like its a good time to start growing my own hops

 

[BeerAg]

Part of the issue is that it takes 3 years to get good yield from Hop plants, as opposed to things like wheat or corn where you start from scratch every year.

If the lag wasn't there, supply would line up with demand much easier.

**Conspiracy theory**

Since the big guys use much less hops in their beer, this hurts everyone but the big guys a lot harder. Expect the prices of Budwiser and Miller to go up a lot less than craft brewers. Something tells me that Bud and Miller were not exactly in panic mode when they were checking out the market dynamics of all of this.

**Conspiracy Theory #2**

The supply hiccups are not near as bad as portrayed, but the beer business in general is trying to push a price hike through and is using Ethonol as a convienent scape goat.

 

[Adolphus79]

Zacks Industry Rank Analysis Highlights: Anheuser-Busch, Boston Beer, Molson Coors, Shire PLC and UTD Therapeutic
BusinessWire - November 15, 2007 12:34 PM ET

Drinking a cold one is about to get more expensive. Hops, a key ingredient in beer, are in short supply. The Brewer's Association (an organization that represents microbrewers in the U.S.) estimates that hop production is 10-15% below current demand.

Mother Nature and farmers are to blame for the shortage. Weather conditions in Europe and Australia have hurt crops this year. Previous overproduction led farmers to curtail the amount of acreage devoted to growing hops. At the same time, higher demand for biofuels such as ethanol have made other crops (e.g. corn) more profitable for farmers. (The Brewer's Association estimates that worldwide hop acreage has decreased by 50% over the last 10 years.)

Boston Beer (NYSE: SAM) partially blamed the higher cost of hops for hurting profit margins. The brewer missed third-quarter expectations by three cents per share and lowered its guidance for full-year earnings. SAM expects 2007 per share profits to be in a range of $1.40 to $1.65; it had previously guided for profits between $1.42 and $1.70 per share. The company also warned rising ingredient costs would adversely affect margins in 2008.

The hops shortage is expected to primarily impact microbrewers. It should have a lesser impact on the major brewers, who may be able to exert greater pricing power.

Anheuser-Busch (NYSE: BUD) experienced a drop in gross margins during its third-quarter, but intends to "implement price increases on the majority of its U.S. beer volume in early 2008, with increases in several states in the fourth quarter 2007".

Molson Coors (NYSE: TAP) has also been pushing through higher prices, but also relied on cost-cutting measures to offset higher ingredient costs.

The impact of brewer size is apparent in how brokerage analysts are adjusting their forecasts for 2008. Last week, two of the three covering analysts cut their profit projections on SAM (the other analyst did not change his estimates). At the same time, four of the 12 of the covering analysts raised their forecasts on TAP last week. During the past 30 days, two analysts raised their projections on BUD and four lowered their forecasts.

It is likely that the lower-cost beers have more price elasticity than the higher cost, specialty beers. Ironically, higher beer prices could potentially help BUD and TAP as some consumers opt for lower price brands (e.g. Michelob, Coors) over premium "microbrew" brands (e.g. Abita, Shiner Bock).

BUD, SAM and TAP are all Zacks #3 Rank ("hold") stocks and are classified in Beverages-Alcoholic.

 

[max4677]

Has anyone tried using some of the lesser known varieties? Northern Brewer has a bunch of types I have never heard of, and virtually zero of the ones I know.

 

[mew]

So has this hop/grain shortage thing happened before or is this going to be a problem forever (like what happened to gas prices). It seems like the demand is there, so the market should stabilize itself in a couple growing seasons, right?