subscribe

Subscribe

ourdepartments

sitesearch

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

02.2008

Massachusetts Beverage Business

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

archivedOnBeerReport

HOPPING MAD

Article By: MBB

BEER DRINKERS' WALLETS will be a little bit lighter this year, and it has nothing to do with paying off your holiday credit card bills. A shortage of two of the main ingredients used to brew beer, hops and barley, is expected to cause a 5 percent to 25 percent rise in beer prices in 2OO8.

Greg Koch, owner of Stone Brewing Company in San Diego, said, "The costs are going to go up a solid 2O to 25 percent. It's going to force brewers to do all sorts of different things. When you're in a corner, you'll start chewing the wall. I don't think we're going to see the real story playing out until halfway through the year when brewers find themselves running low on raw materials."

Water, yeast, malt and hops are the four main ingredients in beer - when the price of one of them increases, beer prices go up.

Hops, basically, act as a flavoring and a preservative, and also add a lot to aroma.

But various factors have led to the lack of available hops. A lot of the blame can be laid at the feet of those touting ethanol as an alternative fuel. Government subsidies and increased demand have led farmers to grow more corn and shy away from hops production. Corn is used to make ethanol, and farmers can make more money growing that rather than hops.

"It's going to take a lot of years before the ethanol madness - I want to repeat those words: ethanol madness - to subside," Koch said. "Using a one fossil unit to get 1.1 units of ethanol is nonsensical at best. I think the politicians who are supporting this are skipping second-grade basic math. It's scary, and we brought it upon ourselves."

Andy Tveekrem, brewmaster at Dogfish Head Brewing Company in Delaware, said ethanol is part of it, but a bad harvest in Asia is also a contributor. "The economy is part of it too, with where our dollar is at," he said. "People are looking to North America for bargains where that wasn't happening before."

Tveekrem said malt prices have increased by about 4O percent, while hops are up 3OO percent to 4OO percent over last year. He said the brewery expects the cost to produce each beer will increase by 15 percent, but are planning just a 5 percent price increase, about 5O cents to $1 per six-pack.

"We're eating some of the costs," he said. "We knew if we tried to pass on the price completely, it would probably put us in a bad pricing position in a marketplace where we're already at the higher end. We don't want to price ourselves out of the market."

None of the brewery representatives contacted said the hops shortage will impact their regular beer lineups. However, special beers, such as Stone's 12th Anniversary Ale and their Vertical Epic O8.O8.O8 will be hoppy beers, Koch said. Breweries making hoppy beers that don't already have contracts for hops and malts in place will be in a more difficult financial position.

Boston's Sam Adams will take a hit, president Jim Koch said. Each year, the company runs a home brewing contest where people can win a chance to have their creation brewed by Sam Adams and be included in a mixed six-pack with another home brewer and a company winner. This year, Mike McDole of California entered his double Imperial IPA and won.

The problem: The beer included seven different hop varieties and Sam Adams could not get all of them. "The regular hops we need for our beers we have, but something that is this new, the hops we didn't know we would need, we didn't (have)," said Jim Koch. "We could get some of the hops, but we couldn't make the recipe. We were willing to pay whatever it takes, but this year, it didn't matter. The hops just weren't there. There were none available."

Prices of Sam Adams beers are expected to go up about 5 percent in 2OO8, Jim Koch said. He said the company will eat another 1O percent.

Although most established breweries have contracts to get their needed hops each year, newer breweries without those contracts can be in trouble.

Stone Brewing's Greg Koch said it is still too early to know how the price increases will affect the behavior of beer buyers.

"It's a lot of conjecture at this point," he said. "They may trade down (to cheaper beers), but they may simply drink less. Drinking less is acceptable, but trading down is not."

-Metro West Daily News

Back to the top »