June 25, 2014

Sobering news: Hop harvest can't stand up to expansion of craft beer market

Sobering news Hop harvest can't stand up to expansion of craft beer marketAccording to The Brewers Foundation, the recent surge in micro breweries can be quantified to the tune of a 73 percent increase over the past five years. The Boulder-based agency cites that the number of small breweries across the country has risen from 1,600 to 2,768 since 2009. The rapid and unprecedented growth has the agricultural industry struggling to keep up with the demand for hops, though the stress on the brewers’ end seems to only be felt on the craft beer side of things.

Larger brewers with massive operations (think Miller-Coors, Anheuser Busch, etc.) typically enter into three-year fixed-rate contracts with bulk hop suppliers. This allows the supplier to be ensured enough business to profit while maintaining the overhead that comes along with their front-end costs (larger farms, more employees). Brewers that produce less than 15,000 barrels a year (as most craft brewers do), though, would certainly feel the effects of a hop shortage, as their buying power forces them to rely on lower yield hop farming operations. Such a shortage is beginning to look more and more likely, according to those close to the issue.

“If I were a betting man, I’d put my money on a hop shortage rather than not. With the amount of new breweries opening, I’m not sure the farmers can sustain that amount of growth,” said Bradley Zimmerman, head brewer at Tow Yard Brewing in Indianapolis, to the Indianapolis Business Journal.

The state of Indiana, in particular, has seen unbelievable growth in its craft beer market. The growth there over the aforementioned five-year period has been from 32 breweries to 84, which represents a 162 percent rise.

A hop growing operation based in Washington, 47 Hops, indicated to the Indianapolis Business Journal that there may be no solution except to consume less, as the industry cannot expand much further sustainably.

“[The industry] is moving perilously close to a wall of production capacity,” said a representative from the organization.