By now, you’ve probably noticed that many of your favorite hop varieties are gone from the shelves of your local homebrew shop. Depending on where you live, you may have also seen price increases in craft beer. If you belong to a homebrew club or read the online brewing forums, you have likely heard that there will be a worldwide hop shortage in 2008. What’s going on? At this point, there are still a lot of unanswered questions, but here’s the Cliffs Notes version: Due to an unusual confluence of events, hop availability in 2007 fell below the level of demand. Hop prices are going up — way up. Beer prices are also going up. Some hop varieties will be in short supply and others will be unavailable. How will this affect us as homebrewers? Read on.
How the Hop Market Works
To understand the current situation, you need to understand a little about the worldwide hop market. Hop farmers grow some hops under contact with hop merchants or breweries. Under contract, the buyer is assured the delivery of hops (barring crop failure) and the farmer is guaranteed an agreed-upon price for his crop. Additionally, some hops are sold on the open market. The farmer grows them in the hope that there will be enough demand to sell them at a decent price. This year, the US crop of aroma hops did well, although the high-alpha hops came in a little below expectations. Still, the US produced roughly the same amount of hops in 2007 as it produced in 2006. (In fact, US acreage was up by about 5% and total US production was up about 2%.) Yet, we are now faced with a serious shortage of hops — how is that possible?
Think Globally, Hop Locally
“The first thing you need to understand about the hop market is that it’s global,” says Ralph Olson of HopUnion. The United States exports about 60% of the hops grown here each year. Conversely, we also import a lot of hops. Each year, about 50% of the worldwide hop crop gets converted into hop extract — a liquid alpha acid product. Although hop extract doesn’t get used much in craft breweries, and is almost unheard of at the homebrew level, global giants - such as SABMiller, Heineken, Modelo and Brahma - rely heavily on extract. So, what happens on hop farms, in hop markets and in breweries overseas affects the availability of hops here in the United States and Canada.
“The Perfect Storm”
Hops aren’t the only commodity with a global market, so how did things get so bad so fast? The story of the 2008 hop crisis starts way back in 1992. Back then — when Jay Leno was taking over for Johnny Carson on the Tonight Show, the movie “Wayne’s World” was in theaters and the video game Mortal Kombat made its debut in arcades — worldwide hop acreage hit its all-time maximum at 236,067 acres. Bumper crops led to a great excess of hops, much of which was converted to hop extract, which is stable for years when stored correctly. In the intervening years, this excess was slowly drained away. Often, cans of extract were sold at below cost, because it costs money to keep things warehoused. Farmers continued to grow hops, of course, and these hops continued to be turned into extract. However, each year’s new extract was just “thrown on the pile,” so to speak.
As this was all happening, hop prices stayed low. In fact, in many years, it cost more to grow hops than they could be sold for, and farmers took a loss. With hops and extract being cheap on the open market, fewer growing contracts were initiated or maintained.
Predictably, farmers began converting hop acreage to more profitable crops or selling their land to developers, especially overseas. By 2006, worldwide hop acreage was down to
Some of the reduction in hop acreage was due to higher alpha varieties being introduced and hop products with better utilization being developed. However, low prices were the main culprit. The decrease in hop acreage wasn’t planned in any way, it was just a response of individual farmers to market conditions. Sean McGree of Brewers Supply says, “Farmers didn’t have any scientific way to calculate how many acres would be needed each year. They were just pulling acres out the ground because of low pricing. It’s a classic story of supply and demand.”
This year, unusual weather in Europe caused their 2007 hop crop to fall far below expectations. Germany’s crop was OK, but the harvests in Czechoslovakia and Slovenia fell 30% below expectations. (Go to YouTube and type in “Slovenia” and “hops” to see a hop farm devastated by a hail storm just prior to harvest.) England’s harvest was average, but - although classic varieties such as Kent Golding and Fuggles are popular among homebrewers - hop acreage in the UK has fallen so low (under 2,500 acres) that they no longer have much impact on the global hop trade. While all this was happening, the pool of excess hop extract finally dried up. Olson describes the interaction of events as “the perfect storm.”
Why didn’t someone see this coming? Well, some folks did. I heard Olson speak about the decrease in hop acreage at the 2006 Dixie Cup (the homebrew conference thrown by Houston’s Foam Rangers). But nobody knew when - exactly - the problem was going to come to a head. Why? Because nobody knew how much hop product was in storage worldwide. The glut of hops and extract was all in private hands in warehouses and breweries worldwide. Sharing the details of your inventory is never a good business strategy, so nobody knew when the feast would turn to famine. “As late as March of this year (2007), I had no idea that things would get so bad so fast,” says Sean McGree of Brewers Supply. “Nobody had any idea how much was inventory.”
As this is being written, the 2007 harvest is in and being processed. Those with contracts to US growers are getting their hops. In Europe, some contracts are going unfulfilled due to poor yields. The rest of the hops on open market are a hot commodity. (Sorry, were a hot commodity, they’re gone now.) Prices on the open market skyrocketed when people realized that supply would not meet demand. Hops that sold for $2-3 a pound last year ended up selling for up to $26 a pound. And, since the Euro is currently strong versus the US dollar, European brewers had had an economic advantage over their US counterparts. European brewers ponied up the dough and bought up much of the hops on the open market. Some estimates put the hop deficit at 10-15% percent below demand.
Just as nobody knew exactly when the hop crunch would hit, nobody currently knows the full extent of the problem. Hop dealers and brewers are scrambling to secure hops. Craft brewers that have never known a time when hops weren’t available in excess are now wondering about the future of their breweries. The lack of information has led to some serious anxiety, and even some panic, among professional brewers. Others seem to feel that something will occur to make things better. At a minimum, when the 2007 crop gets divvied up and shipped, people will at least know where they stand in terms of hop inventory.
Growers, hop dealers and brewers are all looking for a solution to the problem. New acreage is currently being planted, but it takes 2 years in the US, and 3-4 years in Europe, before new hop acreage will produce harvestable yields. About 5,000 acres were planted in 2007 and potentially another 15,000 acres will be planted in 2008, but getting farmers to convert land to hop acreage can be difficult. Planting new hop acreage requires that the farmer invest in trellises and forego at least a year of producing something they can sell. In addition, a brand new hop farm would additionally require the purchase of the harvesting machines and ovens for drying hops, and these cost millions. And finally, hops are a single use product. If brewers don’t buy them, there is no secondary market. As such, most growers want long-term contracts (at least 4-5 years) before they plant new acreage.
The Crystal Ball
Looking forward, most people think 2009 will be worse than 2008 - although, obviously, there are many variables that will affect hop availability. The big variables are, of course, the worldwide demand for beer and growing conditions in 2008. Sometime after 2009, market forces should start bringing the hop crisis under control. (Of course, this could just set up another bubble and we could go through this all again in 10 years. In the long-term, hop prices have shown cycles over time.)
One big wild card in the future hop outlook is China. China’s economy is growing quickly, and with it its demand for beer. China grows a lot of hops, but not enough to meet their own needs — and they recently converted some of their acreage to cotton and flax. So, China imports hops and the vast majority of Chinese hops aren’t sold outside of China.
If China decided to greatly increase its hop acreage - and look at a map, they have the land - it could easily flood the market with hops in a few years. (And even if the varieties they grow aren’t known to us, it could still be converted to extract.) On the other hand, if the Chinese demand for beer increases, but its hop acreage doesn’t grow apace, China could increasingly be buying hops from the US and Europe.
Wait, It Gets Worse
News of a multi-year hop shortage is bad. However, it gets worse. From the standpoint of homebrewers and lovers of craft beer, there is a crisis within a crisis. Many of the hop varieties we most prize as homebrewers are getting squeezed out by varieties that produce higher yields and higher alpha levels. If a buyer is buying hops for extract, he pays the farmer according to the amount of alpha acids the crop provides. Many of the classic aroma hops have not only lower alpha acid levels, but yield less per acre. For example, Hallertau hops yield about 1,000 pounds an acre, with an average alpha acid level around 4%. In contrast, Columbus yields about 3,000 pounds per acre, at an average alpha around 13% - almost 10 times as much alpha acids per acre. To give another example, at current prices, a grower could make $8,500 per acre growing Columbus compared to only $5,200 per acre for Cascade.
So, even as new acreage is being planted, “aroma acreage” is being ripped out and replaced with “alpha acreage.” “Aroma hops are in serious jeopardy,” says McGree, “aroma acreage is down 12-15% even though craft beer is growing at the rate of 10-12% a year.”
At some point, demand for craft beer may cause the prices for aroma hops to increase to the point that planting more aroma acreage will be a financially viable option for farmers. However, in the short term, growers will be focusing on “growing alpha acids.” Hop merchants such as Olson and McGree are working to try to convince growers to retain as much aroma acreage as possible and to plant new aroma acreage wherever possible, but it will take strong multi-year contracts to convince farmers to buck the high-alpha trend.
What Does This Mean to Craft Brewers?
So what does this mean for our favorite craft brewers? Brewers with hop contracts for US hops will be OK for the years their contracts cover. For example, Vinnie Cilurzo of Russian River Brewing says, “The hop shortage did not affect us this year. I’ve been contracted for some time and in fact, when I heard early in 2007 that there could be a shortage, I purchased any extra varieties that we use that I could get my hands on from last year’s crop. We have everything we need and won’t have to reformulate anything. As for increased pricing, we have already increased our beer pricing due not only to the hop prices going up, but, also due to malt prices going up.” (See the sidebar on page 57 for a rundown on the malt situation.) Ashton Lewis, Staff Master Brewer and Process Engineer for Paul Mueller Company - and also BYO’s Mr. Wizard - elaborates, "The current situation with hops totally blows! [Current hop pricing] adds between $8.50 to $17.00 per barrel of beers with assertive hopping. In percentage terms, that’s an increase in the cost of raw materials between about 50-100% when you also figure in the increase in malt prices."
Brewers without contracts - mostly small craft brewers and brewpubs - will face significant hardship. Some brewers will have to reformulate their beers, even those brewed with a “signature” hop. Peter Ausenhus, brewer at Worth Brewing in Northwood, Iowa says he will not be getting any of the varieties he has been brewing with and will have to reformulate all of his beers. Ausenhus brews 10 gallons (38 L) at a time on a Sabco Brew-Magic system and his plans to expand to a 7–10 barrel brewery will have to be put on hold. It could be worse. Cilurzo says, “I got a call the other day from a friend saying that he would have to stop brewing at his brewery in January as he wouldn’t have any more hops at that point.”
Brian Peters, brewer for Billy’s Brew and Que in Austin, Texas, says that reformulating recipes is not as big of a deal for brewpub brewers as it is for craft brewers. Peters says, “I wasn’t the last guy in the world to find out about the hop crisis, but I think I was second to last. Luckily, none of the beers I brew is ‘branded.’ Every time I brew an IPA, I give it a different name. As long as my customers have something good to drink, they’ll be happy.”
End Of The IIPA?
One thing many beer fans have been speculating about is the end of the imperial IPA, the hop bombs that have been very popular in the past few years. As the reasoning goes, higher hop and malt prices will quickly make these beers go the way of the dinosaur, leaving beer lovers to sit around drinking Scottish 60/- or other low-gravity, lightly-hopped ales. In the short term, this is not likely to happen. Although many brewpubs will quit brewing their biggest, hoppiest beers, microbrewers with branded IIPAs and other aggressively hopped brews are not likely to quit producing them as long as they sell. Certainly, it is reasonable to assume that many breweries may roll out some lighter, less hoppy offerings in an attempt to produce a less expensive product. However, IPAs and imperial IPAs will still be available - at least for awhile.
What Does This Mean to Homebrewers?
As a homebrewer, you are probably wondering what this will mean to you. To be honest, even after hours of interviewing hop merchants, brewers and homebrew shop owners, I’m still wondering the same thing. Although some aspects of this situation are well-documented, some key information is still lacking from the big picture. As such, making any concrete statements about the future is impossible. However, the best consensus picture shows less selection and higher prices for hops over the next few years.
One thing homebrewers need to know is that homebrew shops are at the end of the hop supply chain. Craft brewers who seem huge to us are a drop in the bucket to the global brewing industry; comparatively, we are the amoebas dissolved within that drop. The upside to this position is we don’t need a ton of hops to get by.
A Green Xmas . . . and a Hoppy New Year?
When this issue lands in your mailbox or homebrew shop, it will be right in the middle of the holiday season. And, if you stop by your local homebrew shop, you will find — hops! The 2007 hop crop will be mostly processed and distributed by December and all signs point to a “green Christmas.” None of the homebrew shop owners I spoke to expected to be out of hops, nor had they heard of any shop that would be. However, almost all of the shops I spoke with did expect to be carrying fewer varieties — in some cases less than half of the varieties they carried in 2006. My local shop stocked 49 varieties in 2007. In 2008, they have only lined up 21. Many of our favorite varieties will be gone, but a few new strains will show up. Dave Turbenson of Midwest Supplies says that “the price of a moderately-hopped batch of 5-gallon (19-L) batch of homebrew will increase by a couple bucks.”
Which varieties will be missing? That’s a great question. The exact lineup of hops at your local shop will depend on where they get their hops from, when they found out about the crisis, how much time their hop buyer spent on the phone, if they are on good terms with a local micro that has a long-term contract and many other variables. However, some general trends can be expected.
“C” You Later, C-hops
“You can quote me on this,” says Chris Graham of MoreBeer!, “Kiss Cascades goodbye.” Almost every shop owner I spoke to — with a couple exceptions — expected that this hop will be absent from their shelves in 2008. Gone also will be almost all of the C-hops — including Centennial, Chinook and maybe Columbus. Willamette is also expected to be in short supply. Likewise, say toodles to English hops such as Fuggles, aufwiedersehen to German hops such as Hallertau and Tettnang and sayonara to Saaz, Styrian Goldings and most other European hops. (Even if you can find any, Saaz is reportedly coming in at a whopping 1% alpha acids this year.)
The varieties that will be available will vary from shop to shop, but again, some patterns emerged as I spoke to more and more shop owners. The information I gathered suggests that you should get to know Glacier, Sterling and Vanguard hops. Mt. Hood, (US-grown) Perle, Liberty and maybe Palisades should also be widely available. For some hops — such as Ahtanum, Amarillo, and Simcoe — I got mixed signals.
Expect some “rationing” now and in early ’08 from homebrew shops, but this may relax as the year proceeds. Homebrew shop owners all reported some attempts at hoarding by a minority of homebrewers, and most have been contacted by professional brewers looking to buy outside of their usual supply chain. In response, most shops have been limiting the quantities of hops they sell, or only selling hops when the customer also buys grains or malt extract. In 2008, some shops may reserve certain hop varieties for sale with their beer kits.
Although all these restrictions will likely rub some homebrewers the wrong way, a homebrew shop could easily be completely drained of hops if no limits were in place. “There are only four ingredients in beer. We sell three, and if you can’t get one, nobody is going to buy the other two,” says Chris Farley of Northern Brewer.
Gruit or Screw It?
One semi-popular rumor on the internet is that 2008 will be the Year of Gruit for homebrewers. As the story goes, the supply of hops will evaporate, forcing homebrewers to bitter their beer with spices, herbs, twigs and berries. I asked many shop owners about this. Will brewers be forced to look for alternate forms of bittering or give up brewing? Will we face the “gruit or screw it” scenario? Every one of the owners laughed at this idea. It’s going to be a tough year, but not that tough.
What Should You Do?
There are a number of things you can do over the next few years to lessen the impact of limited hop availability. The first - and perhaps most obvious - is to check your freezer. Stored correctly, hops are good for at least a few years. The level of alpha acids decreases, but they are still suitable for brewing. (In fact, some breweries purposely age their hops to get a more “refined” character from them.)
If your hops have been stored in a non-frost-free freezer, in oxygen barrier bags, they may be good even if they are three to four years old. If you have any doubts, just examine them. If they are green and don’t smell cheesy, they are most likely usable.
If you have some hops on hand, but have a frost-free freezer, repackage them. Take the hops and place them in a small box or large freezer bag and fill the container with crushed ice. (The hops should be bagged, not in direct contact with the ice.) This will buffer them against the freeze/thaw cycle of your frost-free freezer. If you have a “food saver” vacuum sealer, use this to seal up any open bags of hops.
If you do have some Cascade, Fuggles, Hallertau, Saaz or any other scarce hop variety, you have a couple options for using it. The first option is to brew the recipes you are used to, without making any changes, until that variety runs out. The other option is to stretch what you have. You could, for example, use your “old varieties” as aroma hops, but employ a new hop for bittering. And of course, you could brew less hoppy beers until your favorite variety runs out. (I mention that last option only as a theoretical possibility.)
In 2008, we’ll all have to learn to make appropriate substitutions. If you check out byo.com, there is a hop substitution list online. Likewise, Hopunion has a downloadable .pdf detailing the hop varieties they carry and their appropriate substitutions. (Their website can be found at www.hopunion.com.)
For Cascade, Centennial is an obvious substitution, but it is also in short supply. If you can get Amarillo or Ahtanum, these are a decent substitutions. Palisades might also do in a pinch.
Vanguard and Liberty can be used as a substitute for Hallertau. Sterling is said to resemble a mixture of Saaz and Mt. Hood and Glacier can be used as a sub for Willamette, US-grown Fuggles, US Tettnang or US Styrian Goldings. The recommended substitutions for Glacier highlights an important point - you aren’t going to find varieties that exactly mimic your favorite varieties. To me, Willamette, Fuggles, Tettnang and Styrian Goldings are all different hops. Any hop that could sub for all of them is not going to taste like any one them specifically.
As the year progresses, it will likely be beneficial to check out as many homebrew shops as possible, and recheck them occasionally. Different shops will be carrying different hop varieties, and some varieties may appear suddenly - for example, if the local brewpub or microbrew goes out of business. A final option may be to grow your own. Hop rhizomes are, predictably, in short supply, but if you can find some, you can have a decent crop as early as 2009.
Your best bet may be to just forget about the varieties you can’t get, and learn to treat new hop varieties as their own thing. Hop varieties that are obvious substitutions for popular hop varieties will dry up quickly. Instead of brewing a beer that could never possibly live up to its old formulation, try learning about the new varieties and brew the best beer you can with them. (Look to the next issue of BYO for in-depth information on some of the newer hop varieties.) There was a time when all hop varieties were new to all of us. We learned what they tasted like, and what beers they could be used in, by brewing, tasting and rebrewing beers.
Back in Green
This hop shortage is going to cause a big storm in the brewing community. However, the dark clouds may have a silver lining. Sometimes tragedy spurs innovation. Did the rock band AC/DC give up when their singer Bon Scott died? Hell no, they found a new singer and recorded one of the classic rock albums of all time, “Back in Black.” So, in 2008, get ready to start from scratch and brew some great beers with the hops available. Because many classic hop varieties will be absent in 2008, style guidelines based on classic beer styles will be of less value when formulating recipes. Instead, you will need to use your taste buds, nose, imagination and brewing skills to get the best expression from the hops available. By intuition, trial and error, homebrewers will need to figure out which hops go best with the caramel flavors of a red ale, the roasty character in dark beers, the crispness of a nice lager or the spicy aspects of some Belgian brews.
A little artificially-imposed constraint can actually heighten artistic expression. Bach wrote some of the best music in history under the strict rules of the Baroque period. (Likewise, look at what AC/DC has done with only four chords.) You may be down to a handful of varieties in your freezer soon, but getting to know everything about them may lead you to formulate your best beer ever.
The Future of Homebrewing
Some folks have opined that the decrease in hop varieties will cause some homebrewers to take a break for a few years or quit altogether. Others say that, as the price of commercial beers go up, homebrewing will become a more attractive option for many. Charles Culp of Austin Homebrew Supply doesn’t see the hop shortage fundamentally changing our hobby. “Homebrewing is a lifestyle,” he says, “We do it because we like brewing. People aren’t going to throw this all away just because they can’t find any Styrian Goldings.”
We’re all going to spend some time crying in our beers over the temporary absence of our favorite hop varieties. However, this shortage will likely spur a lot of innovation in brewing and — just as with the birth of the craft brewing industry — homebrewers will be a vital force in the process.
After a gloomy week of researching this story, I turned on CNN and saw that water may need to be rationed in some areas of the South next year. Looking for some good news, I called Greg Doss of Wyeast and asked if yeast would be available. He laughed. “Yeah,” he said, “we’ll make all the yeast you guys need.”
Chris Colby is Editor of Brew Your Own. His brewing motto is “Amarillo and AC/DC.”