Rising Hops Prices
Make Craft Brewers Jumpy
By Tom Acitelli in the
Wall Street Journal
In April 1975, San
Francisco's Anchor Brewing Co., the only craft brewery in America at the time,
introduced a beer that its owner, Fritz Maytag, called Liberty Ale. Its name
and label commemorated the 200th anniversary of Paul Revere's ride. But it is remembered
for what was in it: generous helpings of Cascade hops, an essential craft-beer
ingredient that's now in short supply.
Cascade hops were the
first American-made aroma hops, and Liberty Ale was the first commercial
craft-beer to use them. Hops, the flowers of the hop plant, have been since the
Middle Ages beer's primary flavoring agent. They are generally added for two
reasons: to make beer bitter and to give it a certain bouquet. Before Cascade,
only European hops were considered worthy enough to be used for aroma. American
hops were used only for bittering.
The citrusy-smelling
Cascade changed that. Liberty Ale began what has become in recent years the
most popular craft-beer style in the U.S.: the modern India pale ale or IPA.
IPAs originated in England in the 19th century. While the English likely added
a lot of hops to help keep the beer fresh on long sea voyages to India (hence
the name), Americans a century later added hops to satisfy consumers thirsty
for bitter beer.
Liberty Ale was about
four times more bitter than Miller Lite, also introduced in 1975. The modern
IPAs—and double IPAs and triple IPAs and quadruple IPAs—are many times more
bitter than Liberty, with more alcohol as well.
The popularity of
hopped-up beers has led to a serious hops shortage in the U.S. That shortage
drove the average price for all hops to $3.59 a pound in 2013, up from $1.88 in
2004, according to the nonprofit Hop Growers of America. The Washington-based
merchant 47 Hops warned this spring that choicer hops, including Cascade,
"will likely be over $10 a pound" by the end of 2014.
This spells trouble
for smaller craft brewers, who produce fewer than 15,000 barrels annually. The
increasing cost of hops could put them out of business—ironically, amid steady
growth for the industry.
After nearly 50 years
in the marketplace, craft-beer still accounts for fewer than 15% of annual
sales in the approximately $100 billion American beer market. But craft beer's
market share cracked 5% in 2011, and by 2012 it hit 7.8%, according to the
Brewers Association, a trade group.
The last thing the
industry needs is to pay more for a key ingredient. In the short term, that
seems inevitable. But what can be done in the long term?
The greater demand for
hops has come amid a decline in supply from Oregon, Washington and Idaho, the
nation's top hop-growing states. This was thanks to a global hops glut a few years
ago that spurred growers to pull back at what turned out to be exactly the
wrong time, given the rise in popularity of hoppier beers. In Oregon, the
birthplace of Cascade, more than 300 hop acres have disappeared since 2004. The
state now has 4,786 acres, a significant drop from the 10-year peak of 6,370
acres in 2008.
Other states could
fill this vacuum. New York, for instance, led the U.S. in hop cultivation until
a 19th-century blight and Prohibition killed the industry. The Empire State is
making a quiet comeback: There were about 140 acres of hops in New York in
2013. But the costs remain prohibitively high for some farmers, not least
because they often have to wait at least three years for hop bines to start
producing. Local and state economic-development incentives, similar to those
often doled out for the construction of jobs-bringing breweries, as well as
more federal help through Agriculture Department research, could offset these
costs.
Finally, craft brewers
might be able to help themselves. There is already a movement toward less
hoppy, lower-alcohol beers—what some call "session beers," because
you can drink a few without getting too drunk. This is what most of the popular
craft brands used to be before the rise of the IPA. These appeal to a wider
consumer audience, including those who might be unfamiliar with craft beer—and
unlikely to approach it through a hoppy, superstrong IPA.
More of these beers
with fewer hops may give farmers time to catch up and take the pressure off
smaller breweries to produce hop-heavy signatures or die. American beer
stylistically is now the envy of the drinking world—no small feat given that a
generation ago Big Beer defined the nation's beer as thin, yellow and cheap. No
one wants to see that dominance come to a bitter end.
Mr. Acitelli is the
author of "The Audacity of Hops: The History of America's Craft Beer
Revolution," (Chicago Review Press, 2013).
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