Low Supply Sends Hop Prices Soaring

But just be glad you don’t run your car on hops, because if you did, you could be paying about 10 times what you were last year. That’s right; the prices of some varieties of hops, an essential bittering agent and aroma constituent of every beer, have risen by 1000 percent in the last year.

How can that be possible, you might ask? I sat down with Marty Kuchinski, a local hop farmer, and Brenden Dobel, the Head Brewer at Thirsty Bear, to ask just that question. While I was at it, I also tried Thirsty Bear’s new Wet Hop Ale, brewed with fresh organic Hop-Meister hops from Kuchinski’s farm in Clearlake, CA. What the two guys told me was much more complex than I expected.

The meteoric rise in hop prices can actually be attributed to several factors—both domestic and international—that have in essence provided the perfect storm for the price of hops to spiral out of control over the past year. This year, there were poor hop harvests in the Yakima Valley region of Washington State and in the Hallertau region of southern Germany. In Slovenia, hop farmers lost as much as half of their crops to a hailstorm. And a devastating warehouse fire in Washington State, along with fires at two hop-drying kilns, caused a 20 percent decline in supply. Add to that the weak dollar and farmers shifting to more profitable crops, and it all starts to make sense. In the background of all this, the world’s hop acreage has dropped dramatically in the last 10 years, from 203,000 acres to 113,000 acres, leaving overall hop production now 10 to 15 percent below current demand.

In the 1990s, excess hop production built up a substantial surplus inventory, which resulted in the crops being processed into pellets and extracts that could be stored for long periods of time. Hop inventory that was two to five years old was selling on the open market, forcing prices down lower that what it cost to grow them. The result was that many hops farmers just threw in the towel, and either switched to other more profitable crops or sold out to real estate developers. Although the current prices make hops a very attractive crop to grow, it takes about three years for a new hop field to get to full production, so the near future is uncertain and prices will most likely continue to rise.

Large breweries buy options on their raw materials several years in advance, so they have in some part insulated themselves from the immediate effects of this volatile market. According to the Brewers Association, the danger is most present for those brewers that failed to contract enough hops before the shortage. Small craft breweries usually don’t contract a full year’s worth of hops because their specific needs throughout the year may change and they don’t have the proper storage facilities that the big boys have. These smaller breweries are now subject to the open market, which is currently going through the roof.

In a recent seminar for the Brewers Association, Ralph Olsen, General Manager and Owner of HopUnion, said, It’s not going to get better soon, but will be likely just as bad, or worse, for the crops from 2008 and 2009—in other words, for beers brewed from now through 2010.

Kuchinski planted hops as a test crop on his farm in Clearlake in 2006 and those crops reached their full yield this year. Kuchinski had no idea that hop prices would be 10 times what they were when he made the decision to bring hops in but he told me, Every farmer is a gambler. His bet seems to have paid off well. Kuchinski plans to expand his hop fields from his current eight acres to around 30 acres partly with some root stock from hops that have grown in Lake County since the 1940s. He even plans to experiment with grafting in the greenhouse to possibly create his own variety in the upcoming years.

Now, what about that wonderful Thirsty Bear Wet Hop Ale I was drinking the whole time I was talking with Kuchinski and Dobel? Dobel uses fresh wet organic hops that Kuchinski delivers less than 24 hours after they were harvested to make this magical brew. Just like fresh spices right from the garden will provide a different flavor, using fresh hops bring the true hop characteristics to the forefront of this bold and zesty brew. Herbal flavor and a spicy aroma abound in this very drinkable copper colored ale, but the lack of processing of the hops seems to give it a smoother and mellower flavor than using traditional dry hops. It still has a distinct zing to it, but it’s not that in your face hop attack that other hop-oriented beers usually have. Both hop enthusiasts and the ordinary drinker should both appreciate the uniqueness that this well-rounded brew offers.

Wet Hop Ale is currently available at:

661 Howard Street, San Francisco