Hop shortage threatens craft beer

Craft beer could be undone by its own success, as leading industry figures warn that the rapid boom in the craft category is leaving hops in short supply.

Aroma hops, which are most associated with craft beers, are experiencing serious price increases as supply tightens (Photo: Wiki)

The hop, a pine cone-like plant that comes in several varieties, is a vital ingredient for flavouring beer, especially the kinds of hop-heavy craft brews taking over bar taps across the world.

But in the Yakima Valley, in the US state of Washington, where nearly 80% of the country’s hops are produced, there are fears that the craft boom could turn to bust if demand increases at even a marginally faster rate.

Ben St. Mary, a hop farmer at the 270 hectare Blackstar Ranch, told AP that producers are “riding a pretty good wave right now,” but supply problems are becoming more of an issue in the region. “It’s caught [hop producers] off guard,” he said.

Brewers dropping production

Leading craft brewers are also voicing their serious concerns about the stability of the supply chain in the face of such escalating demand.

Mitch Steele, brewmaster for Stone Brewing Co, one of the world’s flagship craft beer brands produced out of California, warned that “hop usage is outpacing supply.”

“When beer volume projections change, we get into trouble with some [hop] varieties,” he revealed. Some beer makers have even had to drop production because of the shortage, he said.

Price inflation

As craft beer brewers seeks to claim 20% of the US market by 2020 – nearly doubling in just five years – the price of ingredients as supply tightens will continue to grow considerably.

Ann George, administrator of Hop Growers of America, said that the aroma hops associated specifically with craft beers would continue to see the same price rises they have witnessed lately. They currently trade at $3.83 per pound, up 13% from just two years ago.

Meanwhile, production of aroma hops have increased by a staggering 140% in just four years, from 10,000 acres of aroma hops in 2010 to 24,000 by 2014, George said.

The export figures of US craft beer make clear the staggering pace of growth that hop producers and brewers must keep up with in order to survive.

American craft beer exports for 2014 rose globally by 35.7% compared to 2013, according to the Brewers Association, which represents 2,500 US craft brewers. Global exports rose to 383,422 barrels, worth $99.7 million, and growth was strong in all major markets.

By comparison, US craft beer exports totalled just $2.9 million in 2004.