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Hops: Ugh, the saga continues

HopsPart of it is pure chance because several beer periodicals just hit the streets, but this seems to have been particularly dreary week for hops news.

The newest issue of All About Beer magazine devotes a chunk of its news section to the hops shortage. Every regional edition of the Brewing News family of “brewspapers” has a story about hops, with the word crisis appearing way too much. Some of it is just print lagging behind what we already knew.

But I also heard a couple of nasty rumors this week that need investigating. It’s starting to look like a visit to the Yakima Valley in May and to the hops fields in Bavaria and Slovenia later this year will be fact-finding missions.

Alpha apparently trumps aroma these days, so it’s not just the future of IPAs we’re discussing.

At mid-week Bill Brand delivered a double whammy with a story for the Bay Area newspapers about beer prices going up, with more details from brewers in his blog.

Many of the horror stories you’ve read are about smaller breweries that didn’t, a perhaps still don’t, have contracts. They were left to buy what they needed on the spot market, which has been just plain ugly. But Brand talks to brewers who have contracts for this year, and they aren’t feeling too comfortable.

They shouldn’t. Consider, for instance, the recent story that India’s beer market will soon rival China. Those guys are going to need a lot of hops.

China already does. China produced 1.2 million hectoliters of beer in 1970, 251 million in 2003. That’s right, from one to two-hundred and fifty-one. In contrast, between 1992 and 2006 world hop acreage dropped from 236,000 to 113,000. Granted, farmers have become more efficient but that’s a lot of acres.

(It’s really an aside, but such a stunning number it merits passing along: UK hop farmers worked 53,500 acres in 1850, but tend to 2,400 today.)

Yes, China and India also will need a LOT more barley malt, and higher prices for malt are a major reason you are seeing $1 a six-pack prices increases as the pump. But — so far, at least — nobody is talking about the same sort of fundamental shift in what varieties of malt are available as they are when discussing hops.

Does anybody know where I can buy a “Save the aroma hops” T-shirt?

Stone six-pack prices going up today

Stone BrewingNow this is getting personal.

Stone XII will not be a hop bomb.

Kind of takes your breath away, doesn’t it? It gets worse. Ballast Point has quit bottling Dorado, one of the style-defining Double (some say Imperial) IPAs. A beer that a beer brewing chemist once described this way: “‘Savage’ flavor but not taste. Hoppy. Hoppy. Hop. Hop.”

Pete Rowe of the San Diego Union-Tribune (who consistently offers some of the best daily newspaper reporting on beer) gets down and dirty with what the hop shortage means in San Diego.

We knew higher beer prices were coming (and in some cases had already arrived). Rowe reports six-packs from Stone Brewing, most of which cost $7.99, will be marked up an additional $1 to $1.50 as of today.

The choice would be to change recipes, and to abandon Stone’s bold hop signature. Co-founder Greg Koch said that won’t be happening.

Koch insisted that the brewery’s regular lineup of beers, including Arrogant Bastard Ale, will remain as aggressively hopped as ever. But the Escondido brewery has been forced to make some changes.

Every summer, Stone issues an anniversary ale (the year marked by Roman numerals), a brew that typically reflects the company’s belief that hops are bitter and more hops are better.

Not this year. “That decision has been made for us,” Koch said. “It won’t be über-hoppy, as anniversary ales have been in the past.”

Rowe’s got more news from San Diego — hmmm . . . Pure Hoppiness — but also asks the elephant-in-the-room-question.

Will drinkers abandon Sierra Nevada, Green Flash, et al. for cheaper, mass-marketed beer?

Koch answers that question with a question.

“Or will they buy less? There are a lot of question marks out there.”

How expensive are hops? They’re on eBay

Samuel Adams hops sampleWe should have seen this coming. The “hops crisis” has reached the point that hops are up for sale on eBay.

Forget the bottles of Stone Epic Vertical and Lost Abbey Angel’s Share. Now you can buy the pure stuff. Just rip open the package and stick your nose in (somewhat like the drawing on the package).

Dump the hops into your beer. OK, that might not be such a good idea.

Granted, these promotional packages from Boston Beer won’t take you far. One weighs about 4 grams (and that includes the packaging). But think of it like gold &#151 the price is only going up.

Don Russell (Joe Sixpack) had a terrific column last week in which Dan Weirback of Weyerbacher Brewing in Pennsylvania talked specifically about how much more he is paying for hops and what it means for prices. Double Simcoe IPA (the No. 2 rated beer in the NY Times “extreme” tasting) will cost $15-$18 per case more.

It’s scary out there right now.

I got a look at latest prices on a one-page price sheet from GW Kent (dated Dec. 20) when I stopped in at a local brewery. A 44-pound box of German Hallertau Select is selling for $440, or $11 a pound. Not bad, until you notice the alpha acids on this delicate hop are just 1.5%. That’s not going to add much bitterness.

This provides a graphic illustration that it’s really a worldwide alpha shortage driving up hop prices. Not alpha that is going into niche beers like Double Imperial IPAs but into the millions of gallons of industrial pale lagers with just enough bitterness to balance any malt sweetness.

The giant brewing companies making those beers shop for “kilograms of alpha.” In November the going price was about 600 euros per kg of alpha. If my math is correct, the prices on this sheet are more like 870 euros per kg. Doesn’t seem we’re headed in the right direction.

Hallertau Mittelfrueh (which is in the Samuel Adams package) costs $1,144 for a 44-pound box (4.5% alpha), while Hallertau Tradition has a little more pop (5.5% alpha) and costs $1,276.

Disclaimer: I received one of these packages in a press kit. Words on the back support the notion “Hops are to beer what grapes are to wine,” discuss the hopping levels of Boston Lager versus industrial beers and promote “noble” hops.

But I particularly like a warning on the front that hops “are NOT intended for ingestion. So please smell, do not eat.”

The package is going on a shelf with Daria’s collection of Prohibition-era hop boxes, many of which still contain hops about three quarters of a century old (none of which we are tempted to sample).

Be happy somebody’s looking out for our hops

Looking for hopsHere’s a scary thought from Ralph Olson of Hopunion, one of craft brewers’ go-to hop purveyors:

“They (large breweries around the world) want your hops now.”

Olson was talking on a “packed” tele-conference call this week, along with Ian Ward of Brewers Supply Group, updating members of the Brewers Association on the status of the 2007 hops and malt crops and prospects for 2008.

You may have already read more about beer price increases than you want to know, but just how serious things have become quite quickly was visually apparent during the presentation. So many brewery representatives showed up that the accompanying online slide show loaded as if we were all on dial-up connections.

Turnout increased three fold over a similar presentation in 2006.

“It’s a matter of economics and agronomics,” Ward said, while detailing the global aspect of what has happened. For instance, when the barley crop tanks in Australia, as it did last winter, fast-growing breweries in the Far East have to look elsewhere for malt. Prices go up.

Same with hops. Hops had been so cheap for so long that when larger breweries around the world needed “alpha” they just bought it on the spot market. When, for reasons that included simple bad luck and ongoing trends, alpha dried up this year they began wandering the earth with their wallets open.

[An amusing aside. Talking about hops, Matt Brophy of Flying Dogs Ales (as you know not a brewing giant, but one that long ago contracted to make sure its hops needs are met in 2008) described what brewers are used to:

“It’s like pizza. You pick up the phone and order pizza and you get pizza.

“You ordered hops and you got hops.”

Not now. No wonder the guy in Illinois is making pizza beer.]

Back to those big brewers. Even though they produce beers with little or no hop character they want high alpha hops because those are the most efficient (making beer at a lower cost). On an ongoing basis high alpha hops compete for space in the hopyard with aroma hops, which are what craft and other traditional brewers use more of.

Circumstances are similar with barley for malt. The competition for acreage with bio-fuels is but one example of non-beer related pressures on barley.

Those are short summaries of a complex matrix. The bottom line is that the cost of beer ingredients is going to continue to rise in coming years. Unless disaster strikes on many agricultural fronts in 2008 we aren’t likely to see jumps of 50% and 100% in malt and hops prices like this year, but they are going up.

To finish what Olson was saying at the top . . .

“European brewers will wire us money (for hops) right now,” he said, fortunately barely pausing before adding, “I’m not going to do it. We have to keep them here, don’t we?”

At the beginning of his book Ultimate Beer, Michael Jackson wrote about “where beer is grown.” I thought about that while Olson was speaking, then Ward. Both emphasized the partnership between the farmers who provide the ingredients and the brewers who turn the ingredients into beer. Hopunion and Brewery Supply happen to be part of that as well.

So there’s another reason that when you drink a beer brewed with hops instead of “alpha” and with a focus on malt flavor instead of efficiency that it’s fair to pay more. And more than simply the percentage increase in ingredient costs.

Somebody, a lot of somebodies along the way, went to the trouble to make it happen.

Hops shortages serious, but nothing new

Did I ever mention that my father was a professor of agricultural economics and wrote a textbook called The Economics of Futures Trading? I’m not saying that much of his brilliance rubbed off on me, but I grew up in an Illinois household where commodities were discussed almost every day. He always knew a range of prices (spot and futures) for grains such as soybeans and corn.

No hops, but what’s going on these days with both the short term supply of hops and the spot and futures prices would have made sense to him. This isn’t happening in a vacuum.

Our neighbor across the street ran a grain elevator and one next door sold tractors and farm implements. I only needed a look at the Christmas presents neighborhood kids were getting to know if it had been a good year or bad.

When I was a kid we’d go for Sunday drives in the country to see how the crops were progressing. In the fall we’d drive by grain elevators. In bumper years you’d see mountains of grain piled all around because there wasn’t enough room to process it all.

And prices sucked. No wonder almost none of the kids I knew who grew up on farms ended up being farmers.

The same situation has existed with hops since beer became an industrial product in the 19th century. There have been boom years and bust years.

Picking hops in New York

Consider this from a feature called “A Glass of Beer” that appeared in Harper’s New Monthly Magazine in October of 1885:

No product of the soil varies more in price than the hop. Having but a single available use, and deteriorating rapidly with age, a year which gives to Germany, England, and the United States a season of average productiveness would create an excess over consumption sufficient to reduce values far below the cost of cultivation. Witness the low prices of 1869, 1871, and 1878, when the entire crop was marketed at from five to twelve cents per pound.

On the other hand, the fancied scarcity of the season of 1882-83 ran the price up to over one dollar, and brought money enough to some lucky holders to pay the cost of a good-sized farm, aggregating to the United States alone a valuation of over $25,000,000. It was said of this season that which will perhaps never be said again, that five pounds of hops could be exchanged for a barrel of flour.

Or what Martyn Cornell posted this week in writing about Kent hops and IPA:

One of the reasons The Times carried hop harvest reports was because of the betting that went on over the yield of the hop tax. By the mid-19th century, according to Peter Mathias’s magisterial The Brewing Industry in England 1700-1830, as much money was being bet on the hop tax yield as on the Derby.

This was not simple gambling, however, but a way for hop growers and hop dealers to lay off, or hedge, the risks that came with involvement in a trade that could see prices triple one year and halve the next, as yields went down and up depending on the weather, outbreaks of pests and the like. If you were a hop buyer and you thought yields would be low, and the tax take (based on quantity) subsequently low as well, but the price high because of scarcity, you bet on a low tax take, and at least made some money as you paid top whack for your hops. If you were a seller and feared a big harvest and low prices, you bet on a high tax yield, and made up for the smaller amount you got for your hops by winning on the hop betting.

The point is that prices of agricultural products go up some years and down others. That doesn’t make current shortages of hops and barley for malt any less serious. To me it’s obvious that being a brewer is about as lucrative as being a farmer.

But while history teaches us ingredient prices will moderate, I worry about long-term price pressures. Take a look at what Maureen Ogle wrote week before last.

She’s right. It is a flat world. Hops and barley are going to have to pay higher rent on the farmland where they are grown or farmers are going to grow something else.

But let’s head into the weekend on a cheerier note, with more from Harper’s:

Poetry and song and the pages of romance have united to make classic the vine-clad hills of the Rhine and of Italy, and next to the ruined castle which crown their commanding heights the traveler looks for the clustering fruit which has give its name to all this region. But he looks in vain if he expects to see anything which adds picturesqueness or beauty to the landscape. A vineyard is not in itself “a thing of beauty.” On the other hand, the golden wreaths of hops, as they hang ripening in the August sunshine, depending in graceful cluster from the tall poles, or swinging in the breeze in umbrella-like canopies, give to the hills and alleys of Central New York, or the slopes of distance California and Washington, or the meadows of sunny English Kent, far more of beauty than the boasted vineyards of France or of Italy ever dreamed.

Sounds more romantic to me than driving around Illinois backroads looking at corn and watching grasshoppers splatter on the windshield.

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